FLYCO(SH:603868)2024-08-28 08:13Investment Rating - The report maintains an "Outperform" investment rating for the company [5][7]. Core Views - The company's Q2 performance was below expectations, primarily due to high sales expenses, leading to a significant decline in both revenue and net profit [6][7]. - The brand structure is being optimized, with the introduction of new products and a focus on high-end design, which has resulted in a 4% increase in online sales for the main brand [6]. - The company is facing pressure on profitability due to increased sales expenses and a decline in gross margin, with a net profit margin of 11.83%, down 10.33 percentage points year-on-year [6]. Summary by Sections Financial Performance - For H1 2024, the company reported revenue of 2.319 billion yuan, a 13% decrease year-on-year, and a net profit of 315 million yuan, down 48% [5][6]. - In Q2 2024, revenue was 1.144 billion yuan, a 12% decline year-on-year, with a net profit of 135 million yuan, down 53% [6]. Brand and Market Position - The company has launched nine new product series in H1 2024, focusing on innovation and design [6]. - The sub-brand BoRui achieved a revenue increase of 35.92% in H1 2024, capturing a larger market share in the online shaving market [6]. Profitability and Cost Structure - The gross margin for Q2 2024 was 54.07%, a decrease of 5.75 percentage points year-on-year, attributed to lower-margin products gaining market share [6]. - The sales expense ratio increased to 35.52%, reflecting higher advertising and promotional costs due to intensified competition [6]. Future Earnings Forecast - The earnings forecast for 2024-2026 has been revised downwards, with expected net profits of 855 million, 1.043 billion, and 1.255 billion yuan respectively [7]. - The company is projected to have a PE ratio of 18 for 2024, indicating a potential upside of 19.2% based on comparable companies [7].