ELLASSAY(SH:603808) Xin Lang Cai Jing·2025-08-30 00:52Core Viewpoint - The company experienced a decline in revenue primarily due to the impact of Ed Hardy's exit, but core revenue showed growth when adjusted for this factor, indicating resilience in a challenging consumer environment [1][2]. Financial Performance - In H1 2025, the company reported revenue of 1.371 billion yuan, a decrease of 5.28% year-on-year, while net profit attributable to shareholders was 85 million yuan, an increase of 45.27% [1]. - The adjusted net profit, excluding investment income and other non-operating factors, was 38 million yuan, down 26% year-on-year [1]. - Q2 2025 figures showed revenue of 681 million yuan, a decline of 2.56%, but net profit increased by 42.76% to 44 million yuan, driven by investment income and asset impairment reversals [1][2]. Domestic and Overseas Business - Domestic revenue was 1.194 billion yuan, down 4.8%, while profit increased by 12.1% [2]. - Overseas revenue was 178 million yuan, down 8.3%, with losses narrowing by 11.5 million yuan due to cost-cutting measures and store optimization [2]. - The company plans to accelerate the closure of underperforming stores and focus on design and brand investment to improve overseas performance [2]. Brand Performance - Revenue by brand in H1 2025 showed ELLASSAY at 542 million yuan (-6.5%), LAUREL at 215 million yuan (+9.6%), IRO at 307 million yuan (+5.6%), and Self-Portrait at 285 million yuan (+20.6%) [2]. - ELLASSAY's online sales grew by 12.5%, while IRO's online channels saw over 60% growth [2]. Profitability Metrics - Gross margin for H1 2025 was 66.7%, down 2.5 percentage points, while net profit margin improved to 6.2%, up 2.2 percentage points [3]. - The increase in net profit margin was attributed to reductions in sales, management, and financial expense ratios, along with higher investment income [3]. Inventory and Cash Flow - Inventory decreased by 21% to 741 million yuan, with inventory turnover days down to 309 days [4]. - Operating cash flow exceeded net profit due to a reduction in inventory levels [1]. Investment Outlook - The company is focusing on cost reduction and efficiency improvements, with a target to enhance operational capabilities through AI and marketing strategies [6]. - Long-term growth potential remains strong for brands like SP, LAUREL, and IRO, with expectations for improved net profit margins as overseas losses decrease [6].