GreatStar(002444) 国泰君安·2024-07-01 14:31Investment Rating - The report maintains an Overweight rating for the company, with a target price of 31.59 RMB, unchanged from the previous rating [3] Core Views - Q2 performance exceeded expectations: The company reported H1 2024 net profit attributable to shareholders of 1.091-1.178 billion RMB, a year-on-year increase of 25%-35%, with Q2 net profit reaching 678-765 million RMB, up 18.9%-34.2% year-on-year [4] - Demand recovery in the hand tools market: The report highlights that the active destocking by supermarkets has largely ended, and the company's order recovery aligns with market demand. The potential US interest rate cuts are expected to boost demand for hand tools, which are highly correlated with US existing home sales [4] - Strategic acquisitions and channel expansion: The company is focusing on expanding its product categories and market share, particularly in the electric tools segment, which is seen as a key growth driver. Cross-border e-commerce is also expected to grow at a rate of over 30% annually, currently accounting for 20% of revenue [4] Financial Performance - Revenue and profit growth: The company's revenue is projected to grow from 13.297 billion RMB in 2024 to 19.056 billion RMB in 2026, with net profit attributable to shareholders increasing from 2.085 billion RMB in 2024 to 2.926 billion RMB in 2026 [8] - EPS adjustments: The report raises the 2024-2025 EPS forecasts to 1.73 RMB and 2.09 RMB, respectively, and introduces a 2026 EPS estimate of 2.43 RMB [4] - Profitability improvement: The company's profitability has significantly improved due to increased revenue scale and the operation of its Southeast Asian manufacturing base [4] Market and Industry Outlook - Hand tools market recovery: The report anticipates a recovery in the hand tools market, driven by potential US interest rate cuts, which could lower mortgage rates and stimulate existing home sales, thereby boosting demand for hand tools [4] - Electric tools as a growth driver: The company is making progress in the electric tools segment, particularly in the "handheld electric tools" market, which is expected to contribute significantly to future growth [4] - Cross-border e-commerce growth: The company's cross-border e-commerce business is expected to maintain a growth rate of over 30% annually, with higher gross margins compared to existing channels [4] Financial Metrics - Valuation metrics: The company's P/E ratio is expected to decrease from 14.25 in 2024 to 10.15 in 2026, while the P/B ratio is projected to decline from 1.77 in 2024 to 1.33 in 2026 [8] - ROE improvement: The company's ROE is forecasted to increase from 12.4% in 2024 to 13.2% in 2026, reflecting improved profitability and efficiency [8]