KINLONG HARDWARE PRODUCTS(002791):1H24 RESULTS UNDER MILD PRESSURE;PRIVATE PLACEMENT TO SUPPORT FUTURE GROWTH
KINLONG HARDWARE PRODUCTS(002791):1H24 RESULTS UNDER MILD PRESSURE;PRIVATE PLACEMENT TO SUPPORT FUTURE GROWTH
New product categories (home furnishing and other architectural hardware) performed well, showing that the firm's efforts to explore new scenarios are gradually paying off. Revenue from home furnishings rose 14% YoY to Rmb590mn, and revenue from other architectural hardware grew 17% YoY to Rmb518mn. The revenue contribution of the new product categories increased by 6ppt YoY to 35%.1H24 results in line with preannouncement and our expectations
1H24业绩符合预公告和我们的预期。
Kinlong Hardware announced its 1H24 results: Revenue fell 4% YoY to Rmb3.21bn, and attributable net profit fell 62% YoY to Rmb4.89mn; in 2Q24, revenue fell 8% YoY to Rmb1.84bn, and attributable net profit declined 26% YoY to Rmb50.76mn, in line with its preannouncement and largely in line with our expectations.
Kinlong Hardware宣布其1H24业绩：营业收入同比下降4%至32.1亿元人民币，归属净利润同比下降62%至489万元人民币；2Q24营业收入同比下降8%至18.4亿元人民币，归属净利润同比下降26%至5076万元人民币，与其预公告相符、基本符合我们的预期。
Demand pressure has increased, and growth rates of product categories has varied, with real estate value chain products under heavier pressure. In 1H24, door and window hardware revenue fell 16% YoY to Rmb1.39bn, door control fell 6% YoY to Rmb168mn, and door and window accessories fell 19% YoY to Rmb239mn. Revenue from public building products such as curtain wall structural parts and stainless steel guardrails rose 18% and 17% YoY to Rmb180mn and Rmb98mn.
需求压力加大，产品品类增长率各不相同，房地产价值链产品承受更大压力。1H24门窗五金收入同比下降16%至13.9亿元人民币，门控同比下降6%至1.68亿元人民币，门窗配件同比下降19%至2.39亿元人民币。幕墙结构配件和不锈钢护栏等公共建筑产品收入同比上升18%和17%至1.8亿元人民币和9800万元人民币。
New product categories (home furnishing and other architectural hardware) performed well, showing that the firm's efforts to explore new scenarios are gradually paying off. Revenue from home furnishings rose 14% YoY to Rmb590mn, and revenue from other architectural hardware grew 17% YoY to Rmb518mn. The revenue contribution of the new product categories increased by 6ppt YoY to 35%.
新产品品类（家居装饰和其他建筑五金）表现良好，显示出公司探索新场景的努力正在逐渐取得成效。家居装饰收入同比增长14%至5.9亿元人民币，其他建筑五金收入同比增长17%至5.18亿元人民币。新产品品类的收入贡献同比增加6个百分点至35%。
Raw materials stable; GM largely flat. In 1H24, the firm's blended GM rose 0.1ppt YoY to 31.3% (30.4% in 1Q24; 31.9% in 2Q24, largely flat YoY). GM of door and window hardware rose 0.6ppt YoY to 39.9%; GM of home furnishings fell 1.2ppt YoY to 29.2%; GM of other architectural hardware rose 1.2ppt YoY to 16.6%; GM of door and window accessories rose 2ppt YoY to 19%.
原材料持平，整体毛利率基本持平。1H24公司综合毛利率同比上升0.1个百分点至31.3%（1Q24为30.4%，2Q24为31.9%，同比基本持平）。门窗五金毛利率同比上升0.6个百分点至39.9%；家居装饰毛利率同比下降1.2个百分点至29.2%；其他建筑五金毛利率同比上升1.2个百分点至16.6%；门窗配件毛利率同比上升2个百分点至19%。
Falling revenue has driven up expense ratios. In 1H24, the firm's headcount continued to decline. Its selling expenses fell 7% YoY, G&A expenses rose 3% YoY, and R&D expenses grew 5% YoY. The blended expense ratio rose 0.4ppt YoY to 27.9%. In 1H24, the operating expense ratio fell 0.5ppt YoY to 17.1%, the G&A expense ratio rose 0.5ppt YoY to 6.3%, and the R&D expense ratio grew 0.4ppt YoY to 4.2% (the blended expense ratio rose 0.5ppt YoY to 24.8% in 2Q24, dragged by the G&A and R&D expense ratios).
营业收入下降推高了费用率。1H24公司员工人数继续下降，销售费用同比下降7%，管理费用同比上升3%，研发费用同比增长5%。综合费用率同比上升0.4个百分点至27.9%。1H24运营费用率同比下降0.5个百分点至17.1%，管理费用率同比上升0.5个百分点至6.3%，研发费用率同比增长0.4个百分点至4.2%（2Q24综合费用率同比上升0.5个百分点至24.8%，受管理费用率和研发费用率拖累）。
Increased credit impairment dragged net margin. In 1H24, credit impairment was -Rmb83.22mn (vs. -Rmb51.17mn a year earlier), and net margin fell 0.2ppt YoY to 0.2%.
信贷损失增加导致净利率下降。在2024上半年，信贷损失为人民币83.22万元（相比去年同期的人民币51.17万元），净利率同比下降0.2个百分点至0.2%。
Sound operational quality. In 1H24, the firm's cash-to-revenue ratio fell 18ppt YoY to 90%, but its net operating cash flow rose Rmb238mn YoY to -Rmb190mn due to less cash payment, with receivables up Rmb203mn and payables down Rmb117mn in 1H24 compared with end-2023. The firm had positive net cash with a debt-to-asset ratio of 44% in 1H24.
业务质量良好。在2024上半年，公司的现金与营业收入比率同比下降18个百分点至90%，但由于现金支付较少，净经营现金流同比增加人民币238万元至-人民币190万元，2024上半年的应收账款增加人民币203万元，应付账款减少人民币117万元，与2023年末相比。公司在2024上半年的债务资产比率为44%，净现金为正。
Trends to watch
需要注意的趋势
Demand is still weak; private placement to support future growth. Looking ahead, we believe demand from completed property projects will remain weak, and the firm will likely maintain resilient revenue by penetrating into lower-tier markets and developing new product categories and scenarios. The firm raised nearly Rmb600mn via a private placement at the end of August. We believe the proceeds will provide strong support for the firm's development of new products and construction of new production bases, allowing the firm to reduce production costs further.
需求仍然疲软；定向增发支持未来增长。展望未来，我们认为已完成的房地产项目的需求将保持疲软态势，公司可能通过进入下层市场、开发新的产品类别和场景，来维持弹性的营业收入。公司于8月底通过定向增发筹集了近600万元。我们认为这笔募集资金将对公司新产品的开发和新生产基地的建设提供强有力的支持，使公司进一步降低生产成本。
Financials and valuation
财务和估值。
Given weak demand recovery and limited release of labor efficiency, we lower our 2024 and 2025 net profit forecasts 48% and 43% to Rmb268mn and Rmb380mn. The stock is trading at 27x 2024e and 19x 2025e P/E. Considering the firm is an industry leader, we maintain an OUTPERFORM rating, but as its valuation is near the bottom, we only cut our target price 29% to Rmb27 (32x 2024e and 23x 2025e P/E), implying 22% upside.
考虑到需求恢复乏力和劳动效率释放有限，我们将2024年和2025年的净利润预测下调48%和43%至人民币268万元和人民币380万元。该股票的2024e市盈率为27倍，2025e市盈率为19倍。考虑到公司是行业领先者，我们维持其在业内的表现优秀评级，但由于其估值已接近底部，我们仅将目标价下调29%至人民币27（2024e市盈率为32倍，2025e市盈率为23倍），暗示上涨22%。
Risks
风险
Weaker-than-expected demand recovery from completed property projects; disappointing increase in labor efficiency; disappointing expansion into new regions.
已完成的房地产项目需求恢复较弱；劳动效率增长令人失望；新地区的扩张令人失望。
译文内容由第三方软件翻译。