Huaan Securities·2024-08-31 03:44Investment Rating - The investment rating for the company is "Buy" [4] Core Views - The company reported a revenue of 44.671 billion (down 12.6%) and a net profit of 2.446 billion (down 19.03%) for H1 2024. It plans to repurchase up to 2 billion HKD of shares over the next 12 months, reflecting confidence in its long-term prospects [1][2] Revenue Performance - The company actively adjusted inventory, resulting in a revenue of 44.671 billion for H1 2024, a year-on-year decrease of 12.6%. The liquid milk segment generated 36.262 billion, down 12.9%. The company faced challenges in fresh milk categories but saw growth in the daily fresh segment. Ice cream, milk powder, and cheese revenues were 3.371 billion, 1.635 billion, and 2.114 billion respectively, with year-on-year declines of 21.8%, 13.7%, and 6.3% [2] Profitability Metrics - The gross margin improved to 40.3%, up 1.9 percentage points year-on-year, due to lower raw milk costs. The selling expense ratio was 28.4%, up 1.2 percentage points, with a reduction in selling expenses by 1.2 billion. The operating profit margin increased by 0.6 percentage points to 7%, while the net profit margin decreased by 0.4 percentage points to 5.48% due to inventory impairment and losses from joint ventures [3] Future Outlook - The company is focused on controlling capital expenditures, which decreased by 10% to 1.693 billion in H1 2024. It aims to enhance shareholder returns, with expectations for a continued increase in dividend payout ratios. The second half of 2024 is anticipated to show marginal improvement as the industry stabilizes [4]