赢家时尚：Unable to meet the expectation of dual engines

Investment Rating - The investment rating for EEKA Fashion (03709.HK) is "BUY" with a target price of HK$12.42, down from a previous target price of HK$ 16.78 [1][2]. Core Insights - The company reported a revenue of RMB 3.3 billion for the first half of 2024, which is flat compared to the previous year. The retail sales in China remained stagnant in Q2, leading to a challenging macro environment for EEKA Fashion [1][2]. - The consumption downgrade and polarization in China have intensified, affecting mid-to-high-end local brands like EEKA Fashion. This has resulted in a mixed performance where higher-end brands like La Koradior and NEXY have seen growth, while other mid-to-high-end brands have retreated [2]. - The number of stores has decreased to 1,912, with a decline in both group-operated and wholesaler stores. The company is replacing smaller stores with larger ones, but waning demand has reduced cross-selling capabilities [2]. - The gross margin has surprisingly increased to 76.3%, driven by successful procurement policies in the wholesale and e-commerce segments [2]. - Promotional expenses increased to 3.7% of total revenue in 2024 1H, exceeding the guidance of 3%, due to a sudden market turnaround. The company plans to adjust its promotional input dynamically based on the economic conditions in China [2]. Financial Summary - Revenue projections for the upcoming years are as follows: RMB 6,912.3 million for 2024, RMB 6,825.3 million for 2025, RMB 7,324.7 million for 2026, and RMB 7,958.0 million for 2027, indicating a year-on-year growth of -1.3% in 2024, followed by 7.3% in 2025 and 8.6% in 2026 [7]. - The gross profit for the years is projected to be RMB 5,205.0 million in 2024, RMB 5,186.0 million in 2025, RMB 5,563.3 million in 2026, and RMB 6,040.9 million in 2027 [7]. - The net profit is expected to decline significantly to RMB 536.8 million in 2024, with a recovery to RMB 674.1 million in 2025 and RMB 888.2 million in 2026 [7]. - The gross margin is projected to remain stable at around 75.9% for the next few years [8].