China National Gold (SH:600916) Guotai Junan Securities·2024-09-01 07:42Investment Rating - The report maintains a "Buy" rating for the company [1][6][11]. Core Views - The company's performance in Q2 2024 was slightly below expectations, driven by the release of investment gold demand, while changes in sales structure impacted profit margins [2][6]. - The company is focusing on expanding its store network steadily, with an emphasis on optimizing its exhibition and franchise policies [1][2][11]. Financial Summary - Revenue for the first half of 2024 reached 35.155 billion yuan, a year-on-year increase of 18.90%, while net profit attributable to shareholders was 594 million yuan, up 10.64% year-on-year [1][3]. - For Q2 2024, revenue was 16.905 billion yuan, reflecting a year-on-year growth of 25.89%, but net profit decreased by 2.58% to 231 million yuan [1][3]. - The company adjusted its EPS forecasts for 2024-2026 to 0.67, 0.77, and 0.89 yuan respectively, down from previous estimates [1][11]. Store Expansion and Business Strategy - In the first half of 2024, the company added a net total of 9 stores, with 12 new franchise stores and a reduction of 3 direct stores [1][2]. - The company plans to add 182 stores in Q3 2024, with 178 being franchise stores [1][2]. - The gold and jewelry business achieved revenue of 16.746 billion yuan in Q2 2024, a year-on-year increase of 26.08% [1][2]. Valuation and Target Price - The target price has been adjusted to 10.39 yuan, down from 13.80 yuan, based on a 15.5 times PE for 2024 [1][11]. - The current price is noted at 8.61 yuan, with a market capitalization of 14.465 billion yuan [6][7]. Profitability Metrics - The gross margin for Q2 2024 was 4.71%, an increase of 0.18 percentage points year-on-year, while the net profit margin decreased to 1.25%, down 0.43 percentage points [1][3]. - The company’s net asset return rate is projected to be 13.7% for 2024, increasing to 14.7% by 2026 [3][11]. Industry Context - The report highlights the competitive landscape and the impact of international gold price fluctuations on the company's performance [1][2]. - The average PE of comparable companies in the industry is noted at 14.80 times for 2024 [11].