Investment Rating - The investment rating for Tianhong International Group (02678.HK) is "Outperform the Market" [1][4][12]. Core Views - The company reported a 4.2% year-on-year revenue growth to 11.24 billion HKD in the first half of 2024, driven primarily by its yarn business, which saw an 8.9% increase in revenue [1]. - The net profit turned positive at 270 million HKD, compared to a loss of 750 million HKD in the same period last year, with a significant improvement in gross margin by 10.8 percentage points to 13.2% [1]. - The company is focusing on optimizing internal costs and enhancing automation, which is expected to reduce labor and electricity costs [1]. Summary by Sections Financial Performance - Revenue for the first half of 2024 reached 11.24 billion HKD, a 4.2% increase year-on-year [1]. - The gross margin improved significantly, rising to 13.2%, with a net profit of 270 million HKD, marking a turnaround from a loss of 750 million HKD in the previous year [1][10]. - The company plans to distribute an interim dividend of 0.1 HKD per share, with a payout ratio of approximately 31% [1]. Business Segments - Yarn business revenue increased by 8.9% to 8.81 billion HKD, accounting for 78.4% of total revenue, with volume and price growth of 6.6% and 2.2%, respectively [1]. - The woven fabric segment saw a decline in revenue by 3.2% to 990 million HKD due to weak overseas market recovery [1]. - The knitted fabric segment's revenue dropped by 25.5% due to the sale of a factory in Vietnam, but profitability improved post-sale [1]. Future Outlook - The company aims to sell 400,000 tons of yarn, 48 million meters of woven fabric, and 6,000 tons of knitted fabric in the second half of 2024, with an overall yarn sales target of 770,000 tons for the year [1]. - The long-term outlook remains positive, with expected net profits of 590 million HKD, 760 million HKD, and 920 million HKD for 2024-2026, reflecting growth rates of 29.2% and 21.5% for 2025-2026 [1][9].
天虹国际集团：上半年收入增长4%，盈利大幅改善