Hongqi Chain(SZ:002697) HTSC·2024-07-26 02:02Investment Rating - The report maintains an "Overweight" rating for the company with a target price of RMB 5.72 [10][23]. Core Views - The company reported a revenue growth of 3.67% year-on-year to RMB 5.19 billion for the first half of 2024, with a net profit attributable to the parent company increasing by 3.81% to RMB 267 million [7][24]. - The company has optimized its store structure and types, completing the renovation of 202 old stores and opening 16 new stores, which has contributed to a 3.62% year-on-year growth in main business revenue [7][8]. - The company is expected to continue improving its market share in convenience stores in Sichuan province, supported by a steady recovery in CPI [7][24]. Financial Performance - For the first half of 2024, the company's main business revenue (including tax) reached RMB 5.79 billion, reflecting a year-on-year increase of 3.62% [7]. - The company’s net profit for Q2 decreased by 10.95% to RMB 103 million, primarily due to a decline in investment income from Xinwang Bank [8][24]. - The gross margin decreased by 0.37 percentage points to 28.98% due to changes in product structure, while the expense ratio improved due to the integration of online and offline channels [9][24]. Future Outlook - The report forecasts net profits for the company to be RMB 600 million, RMB 623 million, and RMB 650 million for 2024, 2025, and 2026 respectively [7][25]. - The company is undergoing a change in its controlling shareholder, which is expected to bring new development opportunities once the transfer is completed [9][24].