DEEJ(SZ:000423) CSC SECURITIES (HK) LTD·2024-08-23 07:41Investment Rating - The report assigns a "Buy" rating for the company, indicating a potential upside of 15% to 35% [2][4]. Core Insights - The company achieved a revenue of 2.75 billion RMB in H1 2024, representing a year-over-year increase of 26.8%, with a net profit of 740 million RMB, up 39% year-over-year [2]. - The company initiated a mid-year dividend, proposing a distribution of 11.44 RMB per 10 shares (including tax), reflecting a nearly 100% payout ratio, which enhances its investment appeal [2]. - Revenue from the company's main product line, Ejiao and its series, reached 2.55 billion RMB in H1 2024, marking a 32.5% increase year-over-year, with a gross margin improvement of 2.5 percentage points to 75.4% [2]. - The overall gross margin for H1 2024 increased by 3.2 percentage points to 73.5%, with Q2 gross margin at 75.5%, up 5.6 percentage points year-over-year [2]. - The company forecasts net profits of 1.4 billion RMB, 1.64 billion RMB, and 1.88 billion RMB for 2024, 2025, and 2026, respectively, with year-over-year growth rates of 22%, 17%, and 14% [2]. Financial Summary - The company reported a net profit of 780 million RMB in 2022, with projections of 1.15 billion RMB in 2023 and 1.4 billion RMB in 2024, reflecting a year-over-year growth of 77.1%, 47.6%, and 21.9% respectively [3]. - Earnings per share (EPS) are projected to be 2.18 RMB in 2024, 2.55 RMB in 2025, and 2.91 RMB in 2026, with corresponding price-to-earnings (P/E) ratios of 22X, 19X, and 17X [3]. - The company’s total revenue is expected to grow from 4.04 billion RMB in 2022 to 6.54 billion RMB in 2026 [5].