The online distribution business drove revenue growth. The decline in net profit to mother narrowed in Q2. Maintaining a “buy” rating, the 2024H1 company achieved operating income of 0.622 billion yuan, an increase of 2.03% year over year, mainly due to online distribution revenue growth; net profit to mother was 66.8101 million yuan, down 23.18% year on year, mainly due to changes in sales structure, decline in gross margin, and decline in investment income. 2024Q2 achieved revenue of 0.34 billion yuan, up 2.71% year on year and 20.47% month on month; realized net profit of 37.53 million yuan to mother, down 15.38% year on year and 28.19% month on month. Considering changes in the company's revenue structure and continued increase in business cost investment, we lowered the 2024-2025 profit forecast and added 2026 profit forecasts. The net profit for 2024-2026 is 1.53/1.72/2.04 billion yuan (previous value was 1.86/2.17) billion yuan respectively, corresponding EPS was 0.64/0.72/0.86 yuan, respectively. The PE corresponding to the current stock price is 24.1/21.4/18.0 times, respectively, maintaining the “buy” rating.
The gross margin declined due to the increase in the share of online distribution revenue. The 2024H1 gross margin of the cost ratio company was 27.75%, down 4.58pct year on year, mainly due to the increase in the share of online distribution services with low gross margin. 2024H1 online distribution revenue accounted for 41% (+11.6pct year over year), and the gross margin was 18.65% (+2.12 pct year over year). Brand online management service revenue accounted for 21.1% (YoY -2.93pct), gross margin was 41.45% (YoY -7.54pct); brand online marketing service revenue accounted for 28.70% (YoY -7.04pct), and gross margin was 32.85% (YoY -1.62 pct). The decline in gross margin was mainly due to the company's continued increase in business cost investment. The company's 2024H1 net interest rate was 10.76% (YoY -3.52 pct), the sales expense ratio was 11.31% (YoY -0.77 pct), the management expense ratio was 5.29% (YoY -1.44pct), and the R&D expense ratio was 0.99% (YoY -0.42pct). The reduction in the cost ratio was mainly due to the company continuing to strengthen internal fine management to achieve operational efficiency. At the same time, multiple product development cycles have been completed and entered into use.
2024H1 achieved steady growth in GMV, and new leading customers or continuous contributor performance incremental company 2024H1 achieved GMV8.949 billion yuan (+19.1% year-on-year). It mainly cooperated with brands such as Feihe, Anresa, Health Hall, etc., and increased the number of service brands. The company simultaneously expanded cutting-edge overseas brands, and added business cooperation with brands such as Dr. Irena Eris, a high-end Polish skincare brand. In terms of channels, the company continues to work on emerging channels such as Douyin, Xiaohongshu, and WeChat Mini Program. Cooperative brands are further concentrated on leading service providers, global service capabilities are continuously enhanced, and newly signed customers grow or continue to increase performance.
Risk warning: Risks such as increased competition in the proxy operation industry and the revocation of the company's online operation rights by the brand.