HTSC·2024-07-16 01:02Investment Rating - The report maintains a "Buy" rating for the company with a target price of 78.96 RMB, reflecting a premium valuation due to its leading market position and strong overall capabilities [4][6][9]. Core Views - The company is expected to face revenue and profit pressure in 1H24, with projected revenue of 31.265 billion RMB (-12.81% YoY) and net profit of 3.288 billion RMB (-14.94% YoY). This decline is attributed to insufficient effective demand and a high comparative base from the previous year [1][2]. - The company anticipates a recovery in sales and net profit in the second half of 2024, driven by the restoration of inbound and outbound passenger flow, the opening of new projects, and favorable tax reforms [1][3]. - The gross margin is improving, with a reported 33.29% in 2Q24, up 0.82 percentage points YoY, supported by increased contributions from airport channels [2][3]. Summary by Sections Revenue and Profit Forecast - For 1H24, the company expects revenue of 31.265 billion RMB and net profit of 3.288 billion RMB, reflecting declines of 12.81% and 14.94% YoY, respectively. The second quarter is projected to generate revenue of 12.458 billion RMB, with a net profit of 0.982 billion RMB [1][2]. - The company forecasts EPS of 3.29 RMB, 3.74 RMB, and 4.05 RMB for 2024, 2025, and 2026, respectively [4][9]. Market Dynamics - The report highlights a significant increase in domestic duty-free store revenue, with some locations seeing over 100% growth YoY. The upcoming summer travel season is expected to further support recovery in sales [3][4]. - The company is actively expanding its airport channel operations and has won multiple bids for duty-free store management rights at various airports [2][3]. Valuation and Comparison - The target price of 78.96 RMB corresponds to a 24x PE ratio for 2024, which is a premium compared to the average PE of 17x for comparable companies [4][9]. - The company’s market capitalization is reported at 138.365 billion RMB, with a closing price of 66.88 RMB as of July 15 [7].