UE(SH:603600) Huachuang Securities·2024-09-16 12:12Investment Rating - The report maintains a "Recommended" investment rating for the company with a target price of 11.7 CNY per share, compared to the current price of 9.60 CNY [1][2]. Core Insights - The company reported a revenue of 2.05 billion CNY and a net profit attributable to shareholders of 130 million CNY for the first half of 2024, reflecting a year-on-year revenue growth of 33.6% and a decline in net profit of 11.0% [1]. - The second quarter of 2024 saw a revenue of 1.20 billion CNY, with a net profit of 80 million CNY, indicating a revenue increase of 42.4% year-on-year [1][2]. - The company has implemented a cash dividend plan for the first half of 2024, distributing 0.16 CNY per share, with a dividend payout ratio of 41.95% [1]. Revenue Growth - Domestic and international markets contributed to revenue growth, with domestic sales reaching 470 million CNY (up 38.8% year-on-year) and international sales at 1.58 billion CNY (up 32.1% year-on-year) [2]. - Product-wise, office chairs, sofas, and other categories showed significant revenue increases, with office chairs generating 1.98 billion CNY (up 39.9% year-on-year) and sofas at 340 million CNY (up 34.2% year-on-year) [2]. Profitability and Cost Management - The gross profit margin for Q2 2024 was reported at 23.4%, showing a slight year-on-year decrease of 0.3 percentage points but an improvement from the previous quarter [2]. - The company effectively managed its expense ratios, with sales, management, and financial expense ratios at 7.1%, 4.8%, and -0.8% respectively for Q2 2024 [2]. Brand Development and International Expansion - The company is focusing on enhancing its own brand through product innovation and marketing strategies, targeting major online platforms and expanding retail channels [2]. - Internationally, the company is ramping up production capacity in Vietnam and Romania, with significant orders from major clients like Costco and Sam's Club expected to drive revenue growth [2]. Financial Forecast - The company’s projected net profits for 2024, 2025, and 2026 are 321 million CNY, 392 million CNY, and 477 million CNY respectively, with corresponding price-to-earnings ratios of 10, 8, and 7 [2][3].