Company Releases 2024 Interim Report

24Q2 revenue was 0.48 billion, a decrease of 7.4%; net profit to mother was 0.05 billion, a decrease of 30.2%; net profit without deducted back to mother was 0.05 billion yuan, a decrease of 31.9%. 24H1's revenue of 0.83 billion, or 2.95%, was a decline in main business revenue; net profit to mother was 0.08 billion yuan, a decrease of 18.4%; net profit of 0.08 billion was deducted from the mother, a decrease of 18.8%.

By business, 24H1's own brand revenue was 0.41 billion, down 3.78%, accounting for 49.2%; OEM/ODM business actual revenue was 0.42 billion, down 2.06%, accounting for 50.7%.

24H1 gross profit margin of 28.7%, same increase of 0.3 pct; in terms of cost ratio, sales rate 7.1%, same decrease of 0.2 pct, due to improved accurate investment and cost optimization in the current period; management rate 6.9%, increase of 1.8 pct, due to current brand, operation, organizational upgrades, etc.; financial rate -0.3%, same decrease 0.2 pct; R&D rate 1.8%, same increase of 0.4 pct; 24H1 net profit margin of 9.5%, same decrease of 1.8 pct.

The brand was renewed and upgraded, and 24H1's new “Born into the Wild” brand image covered all categories of professional camping and hiking equipment and clothing, making a stunning debut, leading the new trend of camping and hiking culture in China. Guided by a brand spirit that pursues freedom and is born out of the wild, the company released the “Crossing the Wilderness” plan to build a hard-core outdoor brand belonging to China based on the Hengduan Mountains in China, showcasing the company's deep outdoor brand genes.

Based on in-depth insight into the market and user needs, Mu Gaodi's product line has been fully upgraded, achieving full coverage of scenarios from low altitude to high altitude hiking, etc., and launched a series of hiking and mountaineering products such as “Snow Wing”, “Light Wing”, and “UL” with “Cold Mountain” as the core. At the same time, the company has built three core product systems: sleep system, carrying system and clothing system to achieve full coverage of the product matrix.

Continuously improve operational efficiency and lay out global production capacity

Externally: Actively respond to the complex changes in the international situation, implement diversified production capacity strategies at home, Bangladesh, Vietnam, etc., combine reasonable distribution of orders to reduce adverse effects on changes in the global trade situation, enrich the supply chain of end customers, improve product delivery capabilities, and ensure the stable development of strategic customers.

Internally: Improve asset and capacity utilization through measures such as optimizing production plans, improving employee production efficiency, factory expansion, external cooperation to increase flexibility, launching information systems, and improving lean production; stabilize quality; optimize delivery cycles, improve operational efficiency, and meet the needs of business orders and product changes.

Adjust profit forecasts to maintain “buy” ratings

Based on 24H1's performance and considering the costs required to upgrade the brand, operation, organization, etc., we adjusted the profit forecast. The net profit for 24-26 is 0.101/0.121/0.144 billion yuan (the original value was 0.135/0.157/0.177 billion yuan), respectively, and the corresponding PE is 18/15/13X.

Risk warning: industry competition increases risk; risk of declining overseas demand; risk of exchange rate fluctuations; risk of internal management, etc.