Pu'er Lancang Ancient Tea (6911) H1 2024 earnings summary

Executive summary

• H1 2024 revenue fell 15.9% YoY to RMB195.1m and profit attributable to owners declined 79.1% to RMB5.1m, amid weak offline demand and higher promotion spending.

• Online e-commerce revenue grew 30.5% and key-account revenue rose 143.2%, partially offsetting lower distributor sales.

Financial highlights

• Revenue was RMB195.130m, down 15.9% YoY; cost of sales fell to RMB70.464m from RMB92.203m.

• Gross profit decreased 10.8% to RMB124.666m, while gross margin improved to 63.9% from 60.3%, supported by a higher mix of favored premium 1966 products.

• Operating profit declined to RMB10.707m from RMB33.391m; profit before tax was RMB3.025m versus RMB27.032m.

• Profit for the period was RMB4.414m versus RMB23.568m; profit attributable to owners was RMB5.089m versus RMB24.366m, and EPS was RMB0.06 versus RMB0.39.

• Selling and marketing expenses rose RMB9.9m YoY to RMB77.529m; financial-asset impairment losses increased to RMB4.367m from RMB2.795m.

Outlook and guidance

• H2 priorities include stabilizing offline distributors, developing new channels and customers, promoting classic products, and launching festive and other new products.

• The Shanquan fermentation and capacity expansion project is intended to increase fermented-tea capacity and strengthen supply-chain capabilities; part of listing proceeds will also fund working capital.

• Plans may be adjusted as macroeconomic, industry and operating conditions evolve; no quantitative earnings guidance was stated.