Revenue growth is steady, and profits are rising positively. The company achieved revenue of 0.3 billion US dollars in 2024H1, up 7.0% year on year; gross margin +3.3 pct year on year to 48.5% year on year; net profit to mother increased 37.5% year over year to 0.045 billion US dollars. According to previous announcements, the company's total unaudited sales in 2024Q1/Q2 increased 1.0%/23.7% year on year, respectively, and the Q2 sales growth rate accelerated markedly. The company plans to pay an interim dividend of HK$0.0888 per share, corresponding to an H1 cash dividend rate of approximately 29%.

Non-Amazon channels are growing rapidly. The company's H1 non-Amazon channel revenue increased 46.5% year over year to 0.084 billion US dollars, of which North American non-Amazon channel revenue increased 89.6%; Amazon channel revenue decreased 3.4% year over year to 0.212 billion US dollars. The decline in Amazon channel revenue is expected to be mainly due to short-term Amazon policy adjustments, and the decline was mainly in Q1, and Q2 has recovered positively. The company is actively expanding new channels, increasing the number of products entering offline KA in North America, and entering about 200 new supermarket stores in Asia Pacific H1.

Revenue growth in North America is steady, and the Asian region is growing rapidly. The company's H1 revenue in North America increased 13.0% to $0.225 billion; revenue in the European region fell 18.6% to $0.053 billion, which is expected to be mainly due to reduced demand for air fryers in the Turkish market; and revenue in the Asian market increased by 43.4% to 0.018 billion US dollars.

Levoit's leading edge is solid. H1's Levoit brand revenue increased 32.4% year over year to $0.193 billion. Its leading edge in the US market of its flagship products, air purifiers and air humidifiers, further expanded, and H1's sales share reached 33% and 24%. At the same time, Levoit continued to expand overseas markets such as Germany, and launched new products such as vacuum cleaners with outstanding performance and achieved strong growth. The company's kitchen appliance brand Cosori's revenue fell 24.1% year over year to 0.072 billion US dollars, and Etekcity's revenue fell 16.0% to 0.03 billion US dollars.

Expense ratio optimization improved efficiency, and gross margin and net margin increased markedly. Benefiting from an increase in the share of Levoit brands with high gross margins and a decrease in raw material costs, the company's H1 gross margin was +3.4 pct to 48.5% year over year.

The company actively improves operational efficiency and optimizes expenses. The H1 sales/management expenses ratio was -1.7/-1.3 pct to 15.6%/14.2% year-on-year, respectively. H1 net margin increased 3.4pct year-on-year to 15.1%.

Risk warning: Recovery in overseas demand falls short of expectations; risk of tariffs between China and the US; large fluctuations in raw material prices; large exchange rate fluctuations; increased industry competition; new products and channel expansion fall short of expectations.

Investment advice: Raise profit forecasts and maintain the “better than the market” rating.

The company relies on strong domestic home appliance manufacturing capabilities and localized insight, sales and operation capabilities to achieve continuous expansion of categories and channels in major overseas markets. Considering the company's cost reduction and efficiency, positive profit increase, and profit forecast is raised, the company's net profit for 2024-2026 is expected to be 0.92/1.08/1.23 (previous value was 0.091/0.107/0.123 billion US dollars), +19%/+17%/+14% year over year; diluted EPS = 0.08/0.09/0.11 US dollars, corresponding to PE = 7/6/5 times, maintaining the “better than the market” rating.