Nayuki (2150) H1 2024 earnings summary

Executive summary

• Revenue for H1 2024 decreased by 1.9% year-over-year to RMB2,544.4 million, mainly due to weaker-than-expected consumption recovery and lower store revenue.

• Adjusted net loss was RMB437.7 million, reversing from a profit of RMB70.2 million in H1 2023.

• Store-level operating profit for self-operated stores dropped 65.1% year-over-year to RMB165.1 million, with margin down to 7.8%.

• Net cash from operating activities fell 73.3% to RMB103.8 million.

• The Group operated 1,597 self-operated stores and 297 franchise stores as of June 30, 2024.

Financial highlights

• Revenue: RMB2,544.4 million (down 1.9% YoY).

• Adjusted net loss: RMB437.7 million (vs. profit of RMB70.2 million YoY).

• Store-level operating profit margin: 7.8% (down from 20.1% YoY).

• Cash and cash equivalents: RMB374.1 million; term deposits: RMB2,298.6 million.

• No interim dividend declared for H1 2024.

Outlook and guidance

• Priority is to boost store revenue through increased marketing and brand enhancement while maintaining cost discipline.

• Continued focus on R&D, product quality, and steady promotion of franchise and overseas expansion, with a flagship store in Thailand opening in August 2024.

• Recovery in revenue expected to improve profitability via operating leverage.

• Over RMB2.6 billion in capital to be used cautiously, seeking industry recovery and consolidation opportunities.

• If revenue recovers to 1H2023 levels, store operating profit could improve by RMB100 million or more per month.