China Lilang (1234) H1 2024 earnings summary

Executive summary

• Revenue rose 7.3% year-over-year to RMB1,600.0 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 compensation for distributor termination and product mix changes.

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

• Interim dividend of HKD 0.13 per share and special interim dividend of HKD 0.05 per share declared.

• The Group advanced its multi-brand and internationalization strategy, forming a joint venture for MUNSINGWEAR and preparing for its first overseas store in Malaysia.

Financial highlights

• Operating profit increased 2.8% year-over-year to RMB313.8 million; operating margin fell 0.9 percentage points to 19.6%.

• Net profit margin declined by 0.6 percentage points to 17.5% due to one-off distributor termination costs.

• Net finance income rose to RMB27.8 million, driven by higher interest income from fixed deposits.

• Average inventory turnover days improved to 189 (down from 211 last year); inventory balance at RMB831.1 million.

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

Outlook and guidance

• Full-year store opening target revised to 50–100 new stores (from 100–200), with sales growth target adjusted to 10% (from 15%).

• The Group aims for 30% or more growth in new retail business for the year, focusing on e-commerce and live streaming.

• 400-store renovation project underway to enhance brand image.

• Launch of eco-friendly e-commerce products for Double Eleven festival and continued investment in digital platforms.

• Cautiously optimistic medium- to long-term outlook, with focus on channel reform, new retail, and innovative products.