JACK(SH:603337) Southwest Securities·2024-08-15 10:00Investment Rating - The investment rating for the company is "Buy" (maintained) with a current price of 25.80 CNY [1]. Core Views - The company's H1 performance exceeded expectations, driven by strong sales of key products, leading to an increase in profit margins. Revenue for H1 2024 reached 3.23 billion CNY, a year-on-year increase of 20.2%, while net profit attributable to shareholders was 420 million CNY, up 54.0% [1]. - The company has optimized its product structure, with significant sales growth in its industrial sewing machine segment, which generated 2.80 billion CNY in revenue, a 19.1% increase year-on-year, and a gross margin increase of 3.3 percentage points to 30.2% [1]. - Domestic sales saw a substantial increase of 42.3% year-on-year, benefiting from the company's focus on "explosive products" [1]. - The company is focusing on core categories to create blockbuster products, with notable success from the "Fast Response King" and "Overpass King" products, which have significantly boosted market presence and sales [1]. Summary by Sections Financial Performance - H1 2024 revenue was 3.23 billion CNY, up 20.2% year-on-year, with Q2 revenue at 1.61 billion CNY, a 29.2% increase year-on-year [1]. - The gross margin for H1 2024 was 31.8%, an increase of 3.4 percentage points year-on-year, while the net margin was 13.0%, up 2.8 percentage points [1]. - The company expects net profits for 2024-2026 to be 770 million CNY, 990 million CNY, and 1.22 billion CNY, respectively, with a compound annual growth rate of 31.2% [1][2]. Product Segmentation - The industrial sewing machine segment is the core business, projected to grow at rates of 26.0%, 22.7%, and 15.4% from 2024 to 2026, with gross margins expected to be 29.0%, 30.0%, and 30.5% [4]. - The cutting and spreading machine segment is expected to grow at 23.6%, 18.5%, and 17.3% over the same period, with gross margins of 41.5%, 42.0%, and 42.5% [4]. - The shirt and denim automatic sewing equipment segment is anticipated to grow at 26.5%, 15.5%, and 15.5%, with gross margins of 38.0%, 38.5%, and 38.5% [4]. Market Dynamics - The company has seen a recovery in domestic demand and a slight improvement in overseas demand, with overseas revenue reaching 1.45 billion CNY, a 0.9% increase year-on-year [1]. - The global textile machinery industry is entering an upward cycle, with a 10.2% year-on-year increase in exports of sewing machinery products from China [1]. Strategic Focus - The company is increasing R&D investment and focusing on core categories to enhance product competitiveness, with successful launches of key products driving market penetration [1].