Bestore(SH:603719) Huaxin Securities·2024-09-05 05:42Investment Rating - The report maintains a "Buy" investment rating for the company [1][2]. Core Views - The company is undergoing a strategic adjustment, implementing price reductions on over 500 products, which has impacted its profit margins. Revenue for H1 2024 was 3.886 billion yuan, a decrease of 3% year-on-year, with a net profit of 24 million yuan, down 87% year-on-year [1]. - The second quarter of 2024 saw a revenue of 1.435 billion yuan, a decline of 10% year-on-year, and a net loss of 39 million yuan, reflecting a significant drop in profitability [1]. - The company is focusing on optimizing its supply chain and enhancing operational efficiency, which is expected to gradually improve sales and profitability in the long term [2]. Summary by Sections Financial Performance - The company reported a revenue of 8.048 billion yuan for 2024, with a growth rate of 0% compared to the previous year. The net profit is projected to be 100 million yuan, a decrease of 44.7% year-on-year [4]. - The diluted earnings per share (EPS) for 2024 is adjusted to 0.25 yuan, with corresponding price-to-earnings (PE) ratios of 41, 38, and 36 for 2024, 2025, and 2026 respectively [2][4]. Business Strategy - The company is enhancing its product offerings by focusing on new product development and optimizing its supply chain to reduce costs. This includes extending supplier relationships to build supply chain barriers [2]. - The company aims to drive performance improvement through single product focus and innovation, with significant growth in e-commerce and group buying channels [1]. Market Position - As of H1 2024, the company operated 2,934 stores, a net decrease of 219 stores since the beginning of the year. The company is adjusting its channel structure, with notable growth in group buying sales [1][2].