证券研究报告 | 2025年03月26日 中国利郎（01234.HK） 优于大市 DTC 转型拖累业绩，新零售渠道表现亮眼 2024 年收入增长 3%，净利率承压，高分红策略延续。公司主营商务男装品 牌销售，2024 年收入同比增长 3.0%至 36.5 亿元，净利润同比下滑 13.1% 至 4.6 亿元。毛利率同比下降 0.5 百分点至 47.7%，主要因收回分销权 向分销商支付一次性补偿金及存货拨备回拨减少。销售及管理费用率增 加 2.3 百分点；净利率下降 2.4 百分点至 12.6%。存货周转天数受直营 占比提升及暖冬影响增至 183 天，应收账款周转天数优化至 36 天。高 分红策略延续，全年派息比率达 73.1%，上市累计派息达 73 亿港元。 2024 下半年公司收入 20.5 亿元，同比基本持平；毛利率同比提升 0.3 个百分点至 45.8%，归母净利润同比下降 30.4%至 1.81 亿元。 DTC 转型短期压制业绩，新零售表现亮眼。1）分品牌看，主系列收入下降 3.0%，主要因收回东北和江苏地区分销权并转为 DTC 模式，影响分销收 入，同时向分销商支付一次性补偿金冲减收入；轻商务系列延续 ...

中國利郎有限公司 CHINA LILANG LIMITED Stock Code 股份代號 : 1234 2024 ANNUAL REPORT 年報 中國利郎有限公司 CHINA LILANG LIMITED 中國利郎有限公司 CHINA LILANG LIMITED ANNUAL REPORT 年報 2024 About 關於 China Lilang 中國利郎 China Lilang is one of the leading PRC menswear enterprises. As an integrated fashion enterprise, the Group designs, sources and manufactures high-quality business and casual apparel for men and sells under the "利郎LILANZ" and "利郎LESS IS MORE" brands across an extensive retail and distribution network, covering 31 provinces, au ...

Investment Rating - The investment rating for the company is "Buy" [1] Core Views - The company is experiencing revenue growth driven by light business and e-commerce, with plans to accelerate store openings in the second half of the year [3] - The company has a total market capitalization of 45.86 billion, with a recent closing price of 3.83 HKD [1] Summary by Sections Event Overview - In 2024, the company's revenue, net profit, and operating cash flow were 3.65 billion, 461.2 million, and 527 million respectively, showing a year-on-year growth of 3.0%, a decline of 13.1%, and a decline of 52.1% [2] - The decline in net profit is attributed to a decrease in gross margin and an increase in expense ratio [2] - The company declared a total dividend of 0.30 HKD per share, resulting in an annual dividend yield of 6.96% [2] Analysis and Judgments - The company plans to open 78 new stores throughout the year, with a focus on shopping malls and outlet stores [3] - Retail sales for the main brand and light business series were 2.756 billion and 894 million respectively, with year-on-year changes of -3.0% and 27.2% [3] - Online new retail sales grew by 24%, while the total number of stores increased by 2.9% to 2,773 [3] - The company’s gross margin for 2024 was 47.7%, a decrease of 0.5 percentage points year-on-year [4] Profit Forecast and Valuation - The company’s projected revenues for 2025 and 2026 are 4.10 billion and 4.60 billion respectively, with year-on-year growth rates of 12.26% and 12.33% [9] - The projected net profit for 2025 and 2026 is 504.98 million and 553.32 million respectively, with a year-on-year growth of 9.51% and 9.57% [9] - The earnings per share (EPS) for 2025 and 2026 are forecasted to be 0.42 and 0.46 respectively [9]

自集团去年提出"多品牌、国际化"战略以来，中国利郎积极落实该策略，以提升品牌的价值及加强 企业的影响力。集团成功在去年八月透过控股合资公司的形式，获得了高端高尔夫服饰品 牌"MUNSINGWEAR"在中国的品牌所有权，进一步丰富了旗下高端产品组合。同时，公司也积极与将 品牌推向国际市场。公司预计今年上半年在马来西亚开设首间门店，将中国优质男装品牌引入东南亚市 场，作为开拓新兴海外市场的首站。 中国利郎发布年度业绩 股东应占溢利4.61亿元 同比 减少13.1% 拟每股派息12港仙 公司重视线上线下同步发展。线下，公司会继续精准拓展实体店舖。在2025年净增加100家店舖， 重点选址于省会及地级市的优质购物中心，同时扩展在奥特莱斯的布局，以便有效清理库存并提升销 售。线上，公司将充分利用线上线下的协同效应，通过抖音直播等新零售业务，为顾客提供个性化的购 物体验。集团今年将增加在线上销售新产品，目标新货品销售占电商销售总金额的比重能提高至80%， 争取新零售业务在2025年实现15%以上的增长，而总销售达到不少于10%的增长。 年内，集团推行全新的新零售战略，将电商平台从库存清理渠道转型为主攻新品的零售渠道。公司 ...

Financial Performance - Revenue for the year ended December 31, 2024, was RMB 3,650.0 million, representing a 3.0% increase from RMB 3,542.8 million in 2023[13]. - Gross profit for the same period was RMB 1,739.3 million, up 1.9% from RMB 1,706.8 million[13]. - Profit from operations decreased by 9.5% to RMB 552.5 million compared to RMB 610.6 million in 2023[13]. - Profit attributable to equity shareholders fell by 13.1% to RMB 461.1 million from RMB 530.4 million[13]. - Basic and diluted earnings per share decreased to RMB 38.51, down 13.1% from RMB 44.30[13]. - Gross profit margin declined to 47.7%, down from 48.2%[13]. - Operating profit margin decreased to 15.1%, compared to 17.2% in 2023[13]. - Effective tax rate increased to 24.3%, up from 19.4%[13]. - Other income increased to RMB 70.0 million from RMB 51.0 million, with local government grants contributing RMB 66.9 million[72]. - Selling and distribution expenses rose by RMB 101.7 million to RMB 1,058.9 million, accounting for 29.0% of total revenue, up 2.0 percentage points[73]. - Profit attributable to equity shareholders was RMB 461.1 million, a decrease of 13.1%, with the profit margin down 2.4 percentage points to 12.6%[87]. - Earnings per share decreased by 13.1% to RMB 38.51 cents[88]. - The Group's total cash and bank balance as of December 31, 2024, was RMB 3,157.4 million, slightly up from RMB 3,139.3 million in 2023[160]. - Cash and cash equivalents decreased by RMB 250.2 million, with net cash generated from operating activities amounting to RMB 527.3 million[162]. Dividend and Shareholder Returns - Final dividend per share was reduced by 30.8% to HK9 cents from HK13 cents in the previous year[13]. - Special final dividend per share decreased by 40.0% to HK3 cents from HK5 cents[13]. - The Board recommended a final dividend of HKD 9 cents per share and a special final dividend of HKD 3 cents per share, totaling HKD 143.7 million[24]. - The Group's total dividend payment for the year is HK$ 143.7 million, reflecting a stable dividend payout ratio[55][58]. - The Group's dividend policy targets a payout ratio of about 45% to 55% of the annual profit, with potential for additional special dividends based on profitability and cash flow[174]. Retail and Store Expansion - The Group maintained 2,773 stores nationwide as of December 31, 2024, with a net increase of 78 stores, including 994 consignment stores and 64 direct-to-retail stores[25][26]. - In 2024, China Lilang recorded a net increase of 78 stores, bringing the total to 2,773 nationwide, with 2,451 stores under the core collection[50]. - The Group plans to open 100 new physical stores in 2025, focusing on prime shopping centers in provincial capitals and prefecture-level cities[40]. - China Lilang plans to open its first store in Malaysia in the first half of 2025 as part of its international expansion strategy[27][29]. - The Group's total retail stores increased to 2,773 by the end of December 2024, a net increase of 78 stores during the year, with a total retail floor area of approximately 460,205 square meters, representing a 7.1% increase compared to the previous year[103][104]. E-commerce and New Retail Strategy - New retail sales grew significantly by 24% during the year, driven by the transformation of e-commerce platforms into primary retail outlets for new products[26]. - The Group launched a new retail strategy, enhancing online-offline connectivity and customer experience through a fully upgraded retail management system[26]. - The Group aims to increase online sales of new products to 80% of total e-commerce sales by 2025, targeting overall sales growth of at least 10%[40]. - E-commerce sales achieved a growth of 24% during the year, outperforming the overall business performance[51]. - The Group's new retail strategy includes leveraging TikTok live-streaming to enhance online sales and customer engagement[51]. - The Group's new retail strategy has transformed e-commerce from a channel for clearing inventory to a primary retail channel for new products, achieving a 24% growth in e-commerce sales[53]. Product Development and Innovation - The Group's commitment to research and development is evident through the launch of new product lines, including a down jacket series and durable non-iron shirts[31]. - The smart casual collection saw significant growth of 27.2%, driven by increased average sales per store and contributions from new retail channels[56][59]. - Revenue from tops increased by 7.4%, accounting for 65.5% of total revenue, while the down jacket category grew by 40.8%[57][59]. - The introduction of innovative products, such as the Water-Repellent Down 3.0, addressed consumer needs and enhanced the brand's market appeal[117][118]. - The group debuted its durable white non-iron shirts, recognized as "the world's outstanding extra durable white non-iron shirt" by the World Record Certification Agency[6]. - The group launched the "Water-Resistant Down Jacket 3.0," achieving over 10,000 minutes in IDFL's shock test, leading to a 41% year-on-year increase in overall down jacket sales[1]. Strategic Focus and Market Positioning - The Group's strategic focus includes the "Multi-brands and Internationalization" strategy to enhance brand value and market share[27][34]. - The introduction of a direct-to-consumer (DTC) model in select markets has been implemented to replace the previous distributor-dominated model[25]. - The DTC model is expected to positively impact sales starting from 2025, enhancing connections with consumers[38]. - The "LILANZ" core collection will continue channel reform in 2025, enhancing brand-consumer connections through the DTC model, which is anticipated to unlock further sales growth[145]. - China Lilang aims to strategically upgrade its brand position during market consolidation to enhance competitiveness[152]. Operational Efficiency and Inventory Management - The Group's average inventory turnover days increased to 189 days as of June 30, 2024, compared to 170 days in the previous year[20]. - The Group's inventory management strategy includes enhancing supply chain efficiency and further automating production to improve profitability[41]. - Average inventory turnover days increased to 183 days, up by 13 days compared to the previous year, primarily due to a higher proportion of direct retail sales[167]. - The total inventory balance rose by RMB 261.2 million to RMB 1,086.9 million as of December 31, 2024[167]. Corporate Social Responsibility and Governance - China Lilang has donated over RMB 6.58 million and established 23 Dream Centers, benefiting approximately 30,881 children in underdeveloped areas through its "2022-2027 Aesthetic Education Public Welfare Program"[140]. - The group has donated RMB 5 million to Jinjiang Municipal Hospital and collaborated with Tencent Charity Foundation to donate RMB 1.10 million for charitable initiatives[140]. - The company complies with all code provisions of the Corporate Governance Code during the year ended December 31, 2024[198]. - The group is committed to environmental sustainability, incorporating it into daily operations, with details outlined in the Environmental, Social and Governance Report[186]. Risks and Challenges - The company faces strategic risks including economic slowdown and deterioration of market competition, as well as operational risks related to ineffective management of retail operations and misjudgment of fashion trends[185]. - The Group continues to control financial risks prudently, with the functional currency being Hong Kong Dollars and financial statements translated into Renminbi for reporting purposes[189].

Cash Flow and Financial Position - Net cash generated from operating activities decreased to RMB 219,620 thousand in 2024 from RMB 598,648 thousand in 2023, a decline of 63.3%[72] - Net cash used in investing activities was RMB 124,822 thousand in 2024, significantly lower than RMB 1,045,842 thousand in 2023, a reduction of 88.1%[72] - Net cash used in financing activities was RMB 265,813 thousand in 2024, compared to net cash generated of RMB 422,935 thousand in 2023[72] - Cash and cash equivalents decreased by RMB 171,015 thousand in 2024, compared to a decrease of RMB 24,259 thousand in 2023[72] - Cash and cash equivalents decreased to RMB 3,075,489,000 as of 30 June 2024 from RMB 3,139,279,000 as of 31 December 2023[110] Revenue and Taxation - The company's revenue is recognized when control of goods is transferred to customers, with no geographical breakdown provided as operations are predominantly in mainland China[77] - Current tax expenses for PRC Corporate Income Tax increased to RMB 61,365,000 in 2024 from RMB 43,524,000 in 2023, reflecting higher taxable profits[84] - One subsidiary was granted Advanced and New Technology Enterprise status, entitling it to a reduced income tax rate of 15% in 2024[84] - Three subsidiaries in the Tibet Autonomous Region are eligible for a reduced income tax rate of 15% in 2024[84] Financial Reporting and Compliance - The interim financial report was prepared in accordance with IAS 34 and reviewed by KPMG, with no material impact from amended IFRSs[74] - The financial report includes condensed consolidated financial statements and selected explanatory notes, but not all information required by IFRSs[74] - The company complied with all Corporate Governance Code provisions during the six months ended 30 June 2024[151] - The interim results for the six months ended 30 June 2024 were reviewed by KPMG and the Audit Committee but were not audited[151] Research and Development and Subcontracting - Research and development costs rose to RMB 52,934,000 in 2024, up from RMB 51,298,000 in 2023, reflecting continued investment in innovation[81] - Subcontracting charges surged to RMB 192,044,000 in 2024, a significant increase from RMB 132,811,000 in 2023, indicating higher outsourcing activities[81] Earnings and Dividends - Basic earnings per share for 2024 were RMB 0.234, based on a profit of RMB 280,142,000 and 1,197,485,000 weighted average ordinary shares[86] - Interim dividend declared at HK13 cents per ordinary share, totaling RMB 145,516,000, and special interim dividend at HK5 cents per ordinary share, totaling RMB 55,968,000[125] - Final dividend for the previous financial year increased to HK13 cents per ordinary share from HK9 cents in 2023, with a special final dividend maintained at HK5 cents per ordinary share[127] - Total dividends for the period amounted to RMB196,712 thousand, compared to RMB148,630 thousand in 2023[127] Assets and Liabilities - Net book value of property, plant, and equipment decreased to RMB 1,163,549,000 in 2024 from RMB 1,193,679,000 at the start of the year, due to depreciation charges of RMB 66,056,000[89] - Investment properties' net book value slightly declined to RMB 257,307,000 in 2024 from RMB 259,989,000 at the start of the year, with depreciation charges of RMB 3,485,000[90] - The net book value of right-of-use assets as of 30 June 2024 was RMB 252,200 thousand, compared to RMB 241,473 thousand as of 30 June 2023[94] - Additions to right-of-use assets in 2024 amounted to RMB 54,617 thousand, an increase from RMB 44,820 thousand in 2023[94] - Depreciation charges for right-of-use assets in 2024 were RMB 50,574 thousand, up from RMB 47,427 thousand in 2023[94] - The total inventory value as of 30 June 2024 was RMB 831,132 thousand, slightly higher than RMB 825,670 thousand as of 31 December 2023[98] - Finished goods inventory increased to RMB 650,077 thousand as of 30 June 2024, up from RMB 647,677 thousand as of 31 December 2023[98] - Trade receivables, net of loss allowance, stood at RMB 386,747 thousand as of 30 June 2024, down from RMB 392,854 thousand as of 31 December 2023[101] - The loss allowance for trade receivables decreased to RMB 15,254 thousand as of 30 June 2024, from RMB 29,171 thousand as of 31 December 2023[101] - Prepayments to suppliers increased significantly to RMB 30,396 thousand as of 30 June 2024, compared to RMB 1,760 thousand as of 31 December 2023[101] - The carrying amount of inventories sold in the first half of 2024 was RMB 784,640 thousand, up from RMB 702,078 thousand in the same period of 2023[99] - Write-down of inventories in the first half of 2024 amounted to RMB 14,875 thousand, a decrease from RMB 16,430 thousand in the same period of 2023[99] - Bank loans totaled RMB 1,137,439,000 as of 30 June 2024, with RMB 470,570,000 due within 1 year and RMB 666,869,000 due after 1 year but within 2 years[112] - Secured bank loans amounted to RMB 834,500,000 as of 30 June 2024, backed by pledged bank deposits of RMB 900,000,000[114] - Trade and bills payables decreased to RMB 694,001,000 as of 30 June 2024 from RMB 729,945,000 as of 31 December 2023[116] - Lease liabilities' present value increased to RMB 127,340,000 as of 30 June 2024 from RMB 124,058,000 as of 31 December 2023[122] Shareholder and Management Information - Xiao Sheng International holds a 57.82% stake in the company with 692,345,000 shares (L)[145] - Ming Lang Investments Limited holds a 6.26% stake in the company with 74,905,000 shares (L)[145] - Mr. Wang Liang Xing holds a 1.917% stake in the company with 22,950,000 shares (L)[140] - Mr. Wang Cong Xing holds a 1.917% stake in the company with 22,950,000 shares (L)[140] - Mr. Cai Rong Hua holds a 0.151% stake in the company with 1,810,000 shares (L) and an additional 0.601% stake through a discretionary trust with 7,200,000 shares (L)[140] - Mr. Hu Cheng Chu holds a 0.376% stake in the company with 4,500,000 shares (L)[141] - Mr. Pan Rong Bin holds a 0.264% stake in the company with 3,171,000 shares (L)[141] - Mr. Wang Zhi Yong holds a 0.24% stake in the company with 2,517,000 shares (L)[141] - Mr. Wang Jun Hong holds a 0.007% stake in the company with 522,000 shares (L)[141] - Xiao Sheng International is owned 26.289% by each of Mr. Wang Dong Xing, Mr. Wang Liang Xing, and Mr. Wang Cong Xing as of June 30, 2024[142] - Xiao Sheng International holds 26.289% of shares owned by Mr. Wang Dong Xing, Mr. Wang Liang Xing, and Mr. Wang Cong Xing each, with JFIL holding 8.247%, Mr. Hu Cheng Chu holding 5.155%, and others holding smaller percentages as of 30 June 2024[146] - Ming Lang Investments holds 26.289% of shares owned by Mr. Wang Dong Xing, Mr. Wang Liang Xing, and Mr. Wang Cong Xing each, with JFIL holding 8.247%, Mr. Hu Cheng Chu holding 5.155%, and others holding smaller percentages as of 30 June 2024[146] - JFIL's entire issued share capital is held by Vistra Trust (Singapore) Pte. Limited as the trustee of an irrevocable discretionary trust set up by Mr. Cai Rong Hua, with beneficiaries being Mr. Cai and his family members[146] - Key management personnel remuneration increased to RMB6,537 thousand for the six months ended 30 June 2024, compared to RMB4,044 thousand in the same period in 2023[135] Share Options and Incentives - The Company's share option scheme, adopted on 23 April 2019, provides incentives and rewards to eligible participants contributing to the Group[147] - As of 30 June 2024, Mr. Chen Wei Jin holds 433,000 share options with an exercise price of HK$4.31, granted on 3 July 2020[149] - As of 30 June 2024, Mr. Wang Jun Hong holds 350,000 share options with an exercise price of HK$4.31, granted on 3 July 2020[149] - As of 30 June 2024, Mr. Wang Zhi Yong holds 350,000 share options with an exercise price of HK$4.31, granted on 3 July 2020[149] - As of 30 June 2024, Ms. Chen Zhi Mei holds 150,000 share options with an exercise price of HK$4.31, granted on 3 July 2020[149] - As of 30 June 2024, employees hold 9,523,000 share options with an exercise price of HK$4.31, granted on 3 July 2020, after 51,000 options lapsed[149] - The company granted options to associates, including Mr. Chen Wei Jin, Mr. Wang Jun Hong, Mr. Wang Zhi Yong, and Ms. Chen Zhi Mei, who are related to the company's directors and controlling shareholders[150] - The options are exercisable starting two years after the grant date, with specific limits: up to 129,000 options can be exercised by the end of the third year, and up to 130,000 by the end of the fourth year[150] - Up to 30% of the granted options can be exercised by the end of the third year, and up to 60% by the end of the fourth year[150] - The company granted up to 2,830,000 options exercisable by the end of the third year and up to 2,871,000 by the end of the fourth year[151] Corporate Governance and Shareholder Information - The company did not purchase, sell, or redeem any of its listed securities during the six months ended 30 June 2024[151] - The register of members will be closed from 5 September 2024 to 6 September 2024 to determine entitlements to the proposed interim and special interim dividends[152] - Shareholders must submit transfer documents by 4 September 2024 to qualify for the proposed interim and special interim dividends[153] - The company expressed appreciation to its directors, management, staff, shareholders, customers, suppliers, and business associates for their support[155] - Number of shares issued as of 30 June 2024 is 1,197,484,919 shares[156] - Board lot size is 1,000 shares[156] - Listing date of the company is 25 September 2009[156] - New executive directors appointed on 5 February 2024: Mr. Wang Cong Xing, Mr. Pan Rong Bin, Mr. Wang Jun Hong, and Mr. Wang Zhi Yong[156] - New independent non-executive directors appointed on 5 February 2024: Prof. Liao Jianwen and Prof. Jiang Zhan[156] - Chairman of the board is Mr. Wang Dong Xing[156] - Chief Executive Officer is Mr. Wang Liang Xing[156] - Investor relations contact email: ir@lilanz.com.hk[156] - Investor relations contact phone number: (852) 2526-6968[156] - Investor relations contact fax number: (852) 2526-6655[156]

Investment Rating - The investment rating for the company is "Outperform the Market" [5][10]. Core Views - The company achieved a revenue growth of 7.3% in the first half of 2024, with a total revenue of 1.6 billion yuan and a net profit of 280 million yuan, reflecting a year-on-year increase of 3.6% [1][2]. - The company is undergoing a channel transformation, optimizing inventory turnover, and has established a joint venture with Descente to expand into the sportswear segment [1][2]. - Despite a challenging consumption environment, the company maintains a high dividend payout ratio of 72% and aims for a retail growth target of 10% for the year [1][2]. Summary by Sections Financial Performance - Revenue for the first half of 2024 reached 1.6 billion yuan, with a main series revenue of 1.21 billion yuan and a light business series revenue of 390 million yuan, showing growth rates of 4.5% and 17.3% respectively [1][2]. - The gross margin decreased by 1.8 percentage points to 50.0%, influenced by channel reforms and product mix changes [1][2]. - The company plans to distribute an interim dividend of 0.13 HKD per share and a special dividend of 0.05 HKD per share [1]. Growth Prospects - The management has adjusted the retail growth target for 2024 from 15% to 10%, anticipating better performance in the second half of the year [1][2]. - The company aims to open 50-100 new stores and complete renovations for 400 stores to enhance brand image [1][2]. - Future growth is expected in the new retail and light business segments, with a projected net profit of 570 million yuan for 2024, reflecting a 7% increase [2][8]. Valuation - The target price has been slightly adjusted to 4.6-5.2 HKD, corresponding to a price-to-earnings ratio of 9-10x for 2024 [2][8]. - The company’s financial metrics indicate a stable outlook, with projected earnings per share of 0.47 yuan for 2024 and a net profit margin of 14.6% [9][12].

Investment Rating - The report maintains a BUY rating for China Lilang, primarily due to its attractive yield of 9% and valuation of 9x FY24E P/E, despite a cautious outlook for 2H24E [2][4]. Core Views - The company has revised down its FY24E retail sales growth target to 10% from 15%, reflecting macroeconomic uncertainties and company-specific challenges such as DTC transformation and increased operating expenses [2][6]. - Despite a robust new retail sales growth of 37% in 1H24E, the overall sales growth is expected to slow down due to a high base from the previous year and unclear momentum in retail sales [2][6]. - The partnership with Descente to develop the Munsingwear brand in China is seen as a positive move that could enhance growth in the golf wear segment [2][6]. Financial Summary - Revenue is projected to grow from RMB 3,544 million in FY23A to RMB 3,845 million in FY24E, representing an 8.5% year-on-year growth [3][10]. - Net profit is expected to decrease slightly from RMB 530.4 million in FY23A to RMB 528.1 million in FY24E, indicating a 0.4% decline [3][10]. - The company’s operating profit is forecasted to increase from RMB 610.6 million in FY23A to RMB 634 million in FY24E, reflecting a 3.9% growth [3][10]. Earnings Revision - FY24E net profit estimates have been revised down by 16% to RMB 528 million, primarily due to slower-than-expected sales growth and increased operating expenses [7][8]. - The gross profit margin is expected to decline to 46.7% in FY24E from 48.2% in FY23A, reflecting the impact of DTC transformation and a shift in sales mix [7][8]. Market Performance - The current market capitalization of China Lilang is approximately HK$ 4,897.7 million, with a target price of HK$ 4.85, indicating an upside potential of 18.6% from the current price of HK$ 4.09 [4][12]. - The stock has experienced a decline of 13.9% over the past three months, reflecting broader market challenges [4][12]. Strategic Initiatives - The company plans to open its first store in Malaysia as part of its overseas expansion strategy, leveraging its leadership in menswear and value-for-money products [6][12]. - The multi-brand strategy has been launched, with a focus on enhancing product and brand upgrades, which is expected to support long-term growth [2][6].

Financial Performance - Revenue for the six months ended June 30, 2024, was RMB 1,600.0 million, representing a 7.3% increase from RMB 1,491.1 million in the same period of 2023[4]. - Gross profit for the same period was RMB 800.5 million, up 3.6% from RMB 772.6 million year-on-year[4]. - Profit for the period increased by 3.6% to RMB 280.1 million, compared to RMB 270.5 million in the prior year[4]. - Basic and diluted earnings per share rose to RMB 23.4 cents, a 3.6% increase from RMB 22.6 cents[3]. - Total comprehensive income for the period was RMB 282.4 million, compared to RMB 273.3 million in the prior year[60]. - Net profit for the period was RMB 280.1 million, an increase of 3.6% year-on-year, with a net profit margin of 17.5%, down by 0.6 percentage points[23]. - Profit from operations reached RMB 313.8 million, compared to RMB 305.4 million in the previous year, reflecting a stable operational performance[59]. - The Group's net finance income increased to RMB 27.8 million from RMB 22.3 million, indicating improved financial management[59]. Store Operations and Expansion - The Group had a total of 2,709 stores nationwide as of June 30, 2024, including 959 consignment stores and 15 direct-to-retail stores[9]. - The Group plans to launch the MUNSINGWEAR brand products next year and has registered a new company in Malaysia to open its first overseas store[14][18]. - The Group aims to achieve a net increase of 50-100 stores in 2024, adjusting its store opening strategy to focus on prime locations in provincial capitals and prefecture-level cities[46]. - The Group opened 4 additional outlet stores during the period to enhance inventory management and clearance[27]. Marketing and Sales Performance - During the 618 E-commerce Shopping Festival, the Group became the fourth best-selling menswear brand on Tmall, driven by successful product launches and promotional activities[10]. - The smart casual collection saw a significant revenue growth of 17.3%, while the core collection recorded a growth of 4.5% despite challenges in distribution operations due to the transition to a DTC model[15][17]. - The Group's online retail sales increased by 37% during the 6.18 shopping festival, achieving a ranking of fourth in the men's wear sales on Tmall[13]. - Tops accounted for 60.1% of total sales, increasing by 11.8% year-on-year, with down jackets being the standout performer; pants accounted for 25.2% of sales, representing a year-on-year increase of 12.7%[19]. Financial Position and Cash Flow - As of June 30, 2024, the Group's total cash and bank balance was RMB 3,075.5 million, a decrease from RMB 3,139.3 million as of December 31, 2023[49]. - Net cash generated from operating activities amounted to RMB 219.6 million, while net profit for the period was RMB 280.1 million, with a significant reconciling item being a decrease in trade and other payable balances by RMB 116.7 million[50]. - The Group experienced net cash outflows from investing activities of RMB 124.8 million, primarily due to fixed deposits totaling RMB 85.0 million[50]. - Average inventory turnover days increased to 189 days, a decrease of 22 days compared to the same period last year, with inventory balance rising to RMB 831.1 million[51]. Cost Management and Expenses - Selling and distribution expenses increased by RMB 68.1 million to RMB 466.4 million, accounting for 29.1% of total revenue, up by 2.4 percentage points from the previous year[22]. - Administrative expenses rose to RMB 79.9 million, an increase of RMB 6.5 million from the same period last year, with an expenses-to-sales ratio of 5.0%[22]. - Advertising, promotional, and renovation expenses accounted for 13.3% of revenue, a slight decrease from 13.6% in the prior year[3]. - The effective tax rate increased to 18.0%, compared to 17.5% in the previous year[3]. Strategic Initiatives and Future Outlook - The Group maintains a cautiously optimistic outlook for the medium to long term despite challenges such as weakened export demand and an unstable real estate market[44]. - The Group will focus on optimizing its store network and accelerating the development of new retail business to meet consumer demand[44]. - The Group has launched a "Multi-brands and Internationalization" strategy, including a joint venture to operate MUNSINGWEAR in the PRC market, expected to commence in 2025[47]. - The Group aims for a 30% or more growth in its new retail business for the year through innovative online promotions and e-commerce initiatives[46]. Research and Development - The Group's research and development department consists of approximately 357 staff members focused on product design, material development, and sample creation to enhance product competitiveness[39]. - Research and development costs increased to RMB 52,934,000 in 2024 from RMB 51,298,000 in 2023, reflecting a focus on innovation[79]. Shareholder Information and Corporate Governance - The interim dividend declared was HK 13 cents per ordinary share, consistent with the previous year, with a total payout of RMB 145,516 for the period ending June 30, 2024[123]. - The company has adopted a Share Option Scheme to provide incentives and rewards to eligible participants, with details available in the 2023 Annual Report[145]. - The company has complied with all code provisions of the Corporate Governance Code during the six months ended June 30, 2024[149]. - The board composition reflects a mix of executive and independent directors to ensure effective governance[156][157].

Investment Rating - The report assigns a "Buy" rating to the company [2][14]. Core Insights - The company reported a strong performance in Q1 2024, with a high single-digit growth in retail sales compared to the same period in 2023, continuing the growth trend from 2023 [2][14]. - The company achieved a revenue of 3.54 billion RMB in 2023, representing a year-over-year increase of 14.8%, with net profit reaching 530 million RMB, up 18.4% [2][14]. - The company plans to open 100-200 new stores in 2024, aiming for a total of 2,795 stores by the end of the year [2][14]. - The company expects to achieve a 20% growth in new retail business through platforms like Douyin live streaming [2][14]. - The projected earnings per share for 2024-2026 are 0.50, 0.55, and 0.61 RMB respectively, with a target price of 5.47 HKD per share based on a 10x PE ratio [2][14]. Financial Performance - The company’s revenue is projected to grow from 3.96 billion RMB in 2024 to 4.79 billion RMB in 2026, with year-over-year growth rates of 11.8%, 10.1%, and 9.7% respectively [4][14]. - The gross profit margin is expected to improve slightly, reaching 48.4% in 2024 and 48.9% by 2026 [12][14]. - The company’s net profit is forecasted to increase from 594 million RMB in 2024 to 732 million RMB in 2026, with growth rates of 12.1%, 11.3%, and 10.6% respectively [12][14]. Industry Overview - The men's clothing market in China is experiencing a recovery, with a retail sales growth of 3.8% in 2023 compared to 2022 [5][7]. - The market concentration is increasing, with the top 10 brands' market share rising from 16.9% in 2015 to 23.4% in 2023, indicating potential for further growth [5][7]. - The company is positioned as a leading player in the men's apparel sector, focusing on high-quality business and casual wear [7][9].