Investment Rating - The investment rating for the company is "Outperform the Market" [5][10]. Core Views - The company experienced a revenue decline of 8.9% year-on-year to 9.98 billion HKD in the first half of the year, influenced by a weak domestic retail environment. However, the gross profit margin improved slightly due to strict discount control, resulting in a net profit increase of 10% year-on-year to 340 million HKD [1][10]. - The company is focusing on maintaining profitability by controlling discounts, which has led to a slight improvement in gross margin by 0.7 percentage points to 34.2% and a net margin increase of 0.5 percentage points to 3.4% [1][10]. - Inventory turnover efficiency has improved, with inventory days decreasing by 3 days year-on-year and inventory value declining by 0.5% to 470 million HKD [1][10]. - The company has implemented a strategy of closing inefficient stores, resulting in a net reduction of 45 stores to 3,478, with same-store sales declining by 16.4% due to reduced foot traffic [1][10]. Summary by Sections Financial Performance - Revenue for the first half of the year was 9.98 billion HKD, down 8.9% year-on-year. The net profit was 340 million HKD, up 10% year-on-year [1][10]. - For the second quarter, revenue decreased by 10.5% to 4.58 billion HKD, while gross margin improved by 2.0 percentage points to 35.4% [1][10]. - The company expects net profits for 2024-2026 to be 530 million, 665 million, and 811 million HKD, respectively, reflecting year-on-year growth of 8%, 26%, and 22% [2][10]. Operational Strategy - The company is focusing on online public domain platforms, achieving a 10% growth in overall channel revenue, with Douyin platform revenue doubling year-on-year [1][10]. - The strategy includes closing low-efficiency stores and optimizing the store network, which has led to a reduction in the number of stores and a focus on improving sales efficiency [1][10]. Valuation - The target price has been adjusted to 0.65-0.76 HKD, corresponding to a price-to-earnings ratio of 6-7x for 2024 [2][10]. - The company maintains a healthy cash level, with cash increasing by 240 million HKD to 3.11 billion HKD compared to the end of 2023 [1][10].
宝胜国际：上半年收入下滑9%，严控折扣下毛利率提升