China Lilang (1234) H1 2024 earnings summary

Executive summary

• Revenue rose 7.3% year-over-year to RMB1,600 million in H1 2024, with net profit up 3.6% to RMB280.1 million and EPS at RMB23.4 cents, supported by strong e-commerce and retail channel reforms.

• Gross profit margin declined by 1.8 percentage points to 50.0%, mainly due to distributor termination compensation and product mix changes.

• Online store sales surged 37% year-over-year, driven by e-commerce, TikTok livestreams, and strong Tmall performance.

• Interim and special interim dividends declared at HK13 cents and HK5 cents per share, maintaining a stable payout.

• The Group advanced its DTC model in North-Eastern China, expanded its store network to 2,709, and pursued internationalization with a joint venture for MUNSINGWEAR and plans for a Malaysia store.

Financial highlights

• Operating profit increased 2.8% to RMB313.8 million; operating margin declined 0.9 percentage points to 19.6%.

• Net profit margin decreased by 0.6 percentage points to 17.5% due to buyback compensation and product mix changes.

• Gross profit margin fell 1.8 percentage points year-over-year, mainly due to distributor termination and lower unit prices.

• Cash and bank balances totaled RMB3,075.5 million as of June 30, 2024.

• Advertising, promotional, and renovation expenses accounted for 13.3% of revenue, up by RMB97 million year-over-year.

Outlook and guidance

• Full-year store opening target revised to 50–100 new stores (from 100–200), with 400 renovations planned and sales growth target adjusted to 10%.

• Targeting 30% or more growth in new retail business for 2024, focusing on e-commerce, live streaming, and innovative products.

• Continued expansion of DTC model and internationalization, with first overseas store in Malaysia and launch of eco-friendly e-commerce products.

• The Group remains cautiously optimistic for the medium to long term, aiming to expand market share.