Guoquan Food (Shanghai) (2517) H1 2024 earnings summary

Executive summary

• H1 revenue fell 3.5% YoY to RMB2,665.0m; gross profit rose 5.3% to RMB608.9m, while net profit declined 26.7% to RMB85.5m.

• Core operating profit, excluding listing expenses and preferred-share fair-value changes, rose 4.9% to RMB124.9m.

Financial highlights

• Cost of sales declined 5.8% to RMB2,056.1m; gross margin increased 1.9 percentage points to 22.8% from 20.9%.

• Selling and distribution expenses rose 14.0% to RMB302.0m, mainly due to brand-building and development of Douyin, livestreaming and farmer’s market channels; administrative expenses rose 2.2% to RMB221.0m.

• Profit before tax decreased 28.6% to RMB115.8m; income tax expense fell 33.7% to RMB30.3m as taxable income declined.

Outlook and guidance

• Plans include deeper penetration in existing regions, expansion into new regions and store formats, renovation of selected stores, and franchisee support to grow sales and open more stores.

• Priorities include online-to-offline and enterprise sales, Douyin and livestreaming channels, R&D and product development, brand marketing, and digital inventory management.

• Product plans include developing core categories under a one-product-one-factory approach and expanding sourcing partnerships to strengthen quality and cost advantages.