King's Luck(SH:603369) Guoxin Securities·2025-08-26 11:24Investment Rating - The investment rating for the company is "Outperform the Market" [6][20]. Core Views - The company is experiencing a significant decline in revenue, with a 30% year-on-year decrease in Q2 2025, leading to a total revenue of 6.95 billion yuan for H1 2025, down 4.8% year-on-year [1][4]. - The company is focusing on channel management and inventory reduction to stabilize pricing amid declining demand, with a notable increase in sales expenses by 26.3% in H1 2025 [3][4]. - The company anticipates a challenging market environment in the second half of the year, with uncertain recovery in consumer demand and sales pressure on product structure [4]. Financial Performance Summary - In Q2 2025, the company's total revenue was 1.85 billion yuan, a decrease of 29.7% year-on-year, and the net profit attributable to shareholders was 585 million yuan, down 37.1% year-on-year [1]. - The revenue contribution from premium products (Special A and above) was 95.7%, an increase of 0.22 percentage points year-on-year [1]. - The company reported a gross profit margin decline of 0.2 percentage points in Q2 2025, indicating stable performance despite the demand pressure [3]. Regional Performance Summary - In Q2 2025, the company's revenue in Jiangsu province was 1.611 billion yuan, down 32.2% year-on-year, with the Suzhong region showing a smaller decline of 19.5% [2]. - The company added 10 new distributors in the province and 22 outside the province in Q2 2025, indicating ongoing efforts to strengthen its distribution network [2]. Earnings Forecast and Valuation - The company has adjusted its revenue and net profit forecasts for 2025-2027, expecting revenues of 10.615 billion yuan, 11.090 billion yuan, and 12.007 billion yuan, with year-on-year changes of -8.1%, +4.5%, and +8.3% respectively [4][10]. - The projected net profit for 2025 is 3.011 billion yuan, reflecting a year-on-year decrease of 11.7% [10]. - The current stock price corresponds to a P/E ratio of 18.5 for 2025 and 17.7 for 2026, maintaining the "Outperform the Market" rating [4][11].