Investment Rating - The report maintains a "Buy" rating for the company, Baosheng (3813.HK), with a target price of HKD 0.73, indicating a potential upside of 15.9% from the current price of HKD 0.63 [2][4]. Core Insights - Despite a significant revenue decline of 9% in 1H24, Baosheng achieved a 10% year-on-year increase in net profit attributable to shareholders through cost reduction and efficiency improvements, showcasing strong operational management [2][9]. - The company’s ability to expand its operating profit margin amidst declining revenues reflects effective cost control and operational efficiency enhancements [2][9]. - The second half of 2024 will largely depend on revenue performance, but the benefits of cost-cutting measures are expected to continue [2][9]. Financial Performance Summary - Revenue: The company reported a revenue of RMB 18,514 million for 2024E, reflecting an 8% decline year-on-year [3][11]. - Net Profit: The net profit attributable to shareholders is projected to be RMB 516 million for 2024E, a 5% increase compared to the previous year [3][11]. - Profit Margins: The operating profit margin is expected to remain stable, with a slight increase anticipated in 2024 [2][9]. - Earnings Per Share: The diluted earnings per share is projected to be HKD 0.10 for 2024, with a dividend payout ratio close to 55%, leading to a dividend yield of 9.5% based on current stock price [2][9][10]. Operational Efficiency - The company has successfully reduced overall operating expenses by 9% year-on-year, attributed to the closure of inefficient stores and optimization of rental costs [2][9]. - The gross profit margin improved by 2.0 percentage points in 2Q24, driven by better retail discount management and a shift in channel structure due to a decline in wholesale revenue [2][9]. Market Outlook - The demand in the international brand retail market remains weak, and Baosheng is expected to focus on maintaining healthy inventory levels and improving retail discounts in the second half of 2024 [2][9]. - The company may increase the scale of its wholesale business to compensate for the decline in direct store sales, which could positively impact channel structure and gross margins [2][9].
宝胜国际：1H24业绩超预期，降本增效抵御经营负杠杆，保障稳健的利润率