Monalisa(SZ:002918) HTSC·2024-08-23 04:03Investment Rating - The investment rating for the company is "Buy" with a target price of RMB 10.14 [6][7]. Core Views - The company reported a revenue of RMB 2.335 billion for H1 2024, a year-on-year decrease of 19.78%, and a net profit attributable to the parent company of RMB 82.6 million, down 49.77% year-on-year. Q2 revenue was RMB 1.516 billion, down 16.16% year-on-year but up 85.35% quarter-on-quarter [1][2]. - The report highlights that the company is undergoing a channel transformation, with a focus on managing sales expenses effectively. The gross margin is under pressure due to intense price competition in the industry [2][3]. - The company has adjusted its EPS forecasts for 2024-2026 to RMB 0.51, RMB 0.87, and RMB 1.26, respectively, down from previous estimates [1][9]. Revenue and Profitability - For H1 2024, the company achieved revenues of RMB 18.59 million from glazed porcelain tiles, RMB 1.38 million from non-porcelain glazed tiles, and RMB 2.62 million from ceramic boards, with respective year-on-year changes of -16.17%, -54.81%, and -18.05% [2]. - The overall gross margin for H1 2024 was 26.83%, a decrease of 1.09 percentage points year-on-year, primarily due to fierce price competition [2][3]. Expense Management - The company maintained good control over sales expenses, with a total expense ratio of 21.27% for H1 2024, an increase of 2.43 percentage points year-on-year. Sales expenses decreased by 24.52% in absolute terms [3][4]. - The operating cash flow for H1 2024 was RMB 376 million, an increase of 123.25% year-on-year, attributed to improved coordination between production and sales [3][4]. Market Position and Strategy - The company is focusing on channel transformation, with a significant reduction in orders from real estate clients, leading to improved financial metrics and reduced risk of bad debt provisions [4][5]. - The report indicates that the company is likely to emerge stronger after the strategic contraction of its engineering business, with a more streamlined operation [4][5].