GreatStar(002444) 广发证券·2024-07-03 08:01Investment Rating - The report maintains a "Buy" rating for Giant Tech (002444 SZ) with a target price of 30 64 yuan per share, based on a 16x PE multiple for 2024 [1][3] Core Views - Giant Tech's H1 2024 net profit is expected to reach 1 09-1 18 billion yuan, a 25%-35% YoY increase, with Q2 2024 net profit growing 26 4% YoY [1] - The US inventory destocking phase has ended, leading to a recovery in tool market demand, as evidenced by Home Depot's Q1 2024 inventory decreasing by 12% YoY [1] - The company has expanded its product portfolio from hand tools to power tools and laser instruments, with revenue share increasing from 18% in 2021 to 26% in 2023 [1] - Giant Tech's self-branded products now account for nearly 50% of revenue, up from less than 10% in 2016, significantly improving profitability [1] - The company has established 3 Southeast Asian, 5 European, and 3 US production bases, with Southeast Asian facilities contributing to improved profitability in H1 2024 [1] Financial Projections - Revenue is projected to grow from 12 61 billion yuan in 2022 to 22 51 billion yuan in 2026, with a 34 7% YoY increase expected in 2024 [2] - Net profit is forecasted to increase from 1 42 billion yuan in 2022 to 3 34 billion yuan in 2026, with a 36 1% YoY growth in 2024 [2] - EPS is expected to rise from 1 24 yuan in 2022 to 2 78 yuan in 2026 [2] - ROE is projected to improve from 10 6% in 2022 to 14 3% in 2026 [2] Operational Highlights - The company's gross margin improved from 26 5% in 2022 to 31 8% in 2023, with a stable margin of around 31% projected for 2024-2026 [8] - Inventory turnover ratio is expected to increase from 4 48 in 2022 to 6 37 in 2024, indicating improved operational efficiency [8] - The current ratio is projected to improve from 2 75 in 2022 to 3 34 in 2026, reflecting stronger liquidity [8] Industry Context - The US core CPI increased by 3 4% YoY in May 2024, showing marginal easing of inflationary pressures [1] - US retailer inventory grew by 4 8% YoY in April 2024, indicating a recovery in demand [1]