Investment Rating - The investment rating for the company is "Buy" with a target price of HK 16.78 [1][2]. Core Insights - The company faced significant headwinds in the first half of 2024, achieving total revenue of RMB 3.31 billion, which remained flat compared to the same period last year. The retail sales in China continued to stagnate, and the macroeconomic uncertainty posed challenges for the group [1][2]. - The shift in consumer purchasing behavior towards more conservative spending has negatively impacted local mid-to-high-end brands, including the company. Higher-end brands like La Koradior and NEXY showed growth, while other mid-to-high-end brands experienced declines [2]. - The number of stores decreased to 1,912, with both direct-operated and franchised stores declining compared to the end of last year. The company is replacing smaller stores with larger ones, but the diminishing demand is weakening the cross-selling capabilities of these larger stores [2]. - The gross margin performance was surprisingly strong, with an overall gross margin of 76.3%, driven by improved procurement strategies from brands like NAERSI and NEXY [2]. - Promotional spending increased to 3.7% of total revenue in the first half of 2024, higher than the previous guidance of 3%, due to a sudden shift in product demand [2]. - The company is adjusting its growth expectations due to the unexpected market shift, which has affected inventory and promotional strategies. The dual-engine growth expectation has not materialized, leading to a downward revision of profit forecasts and target price [1][2]. Financial Summary - For the first half of 2024, total revenue is projected at RMB 6,912.3 million, with a year-on-year growth of -1.3%. The gross profit is expected to be RMB 5,205.0 million, with a gross margin of 75.3% [5][6]. - The net profit for 2024 is projected at RMB 832.6 million, reflecting a significant decline of 35.5% compared to the previous year [5][6]. - The company’s financial ratios indicate a gross margin of 75.3% and a net profit margin of 12.0% for 2022, with expectations for slight improvements in subsequent years [6].
赢家时尚：双引擎成长预期落空