Rego Interactive (2422) H1 2024 earnings summary

Executive summary

• H1 2024 revenue rose 68.4% YoY to RMB116.204m, driven by tangible-goods sourcing and delivery; gross profit fell 4.4% and period profit declined 76.5%.

• The mix shifted toward tangible-goods delivery, lowering reported gross margin because this revenue is recognized gross rather than net; strategy includes digitalization, OMO services and lottery solutions.

Financial highlights

• Revenue increased RMB47.2m YoY to RMB116.204m; cost of sales rose 191.8% to RMB74.737m as inventory costs expanded with tangible-goods sales.

• Gross profit was RMB41.467m, down 4.4% YoY; reported gross margin fell to 35.7% from 63.0%.

• Profit for the period fell 76.5% to RMB2.731m; profit attributable to owners was RMB3.457m, and basic and diluted EPS was RMB0.01 versus RMB0.02.

• Adjusted net profit was RMB4.031m versus RMB10.681m restated; operating cash flow was negative RMB59.841m versus negative RMB32.146m restated.

Outlook and guidance

• Priorities include strengthening core businesses, improving operating efficiency, prudent risk management and pursuing opportunities across corporate and industry digitalization services.

• Corporate services plans include developing customer and supplier relationships, omnichannel marketing, corporate welfare solutions and virtual- and physical-goods supply chains.

• H2 priorities include lottery marketing tickets, expanding work with Welfare Lottery and Sports Lottery, and developing AI-, IoT- and software-hardware-enabled lottery-store solutions.

• Remaining IPO proceeds of HK$4.9m were expected to be used by 31 December 2024; HK$52.5m of rights-issue proceeds by 31 December 2025.