Shenzhen Pagoda Industrial (Group) (2411) H1 2024 earnings summary

Executive summary

• H1 2024 revenue fell 11.1% YoY to RMB5,594.1m; profit attributable to owners declined 66.1% to RMB88.5m amid weaker consumer spending and brand-renewal costs.

• Direct 2B sales grew 30.0% YoY, while franchised-store sales fell 15.2%; gift sales mix, online engagement and premium-fruit contribution increased.

• Strategy prioritizes high-quality fruit, franchisee economics, operating efficiency, brand development and expansion of domestic and overseas 2B channels.

Financial highlights

• Revenue was RMB5,594.1m, down 11.1% YoY; gross profit fell 13.2% to RMB618.5m and gross margin was 11.1% versus 11.3%.

• Operating profit fell to RMB127.9m from RMB282.9m; profit before tax declined 63.6% to RMB99.3m.

• Net profit fell 66.5% to RMB84.0m; owners’ profit was RMB88.5m versus RMB260.8m, and basic and diluted EPS were RMB0.0583 versus RMB0.1651.

• Adjusted net profit was RMB88.9m versus RMB252.7m; adjusted net margin was 1.6% versus 4.0%.

• Operating cash flow rose to RMB277.7m from RMB225.1m; investing cash outflow was RMB1,002.7m and financing cash inflow was RMB905.8m.

Outlook and guidance

• Retail priorities include improving store efficiency and franchisee profitability through royalty-fee reductions, marketing and training support, and franchise-model optimization.

• Plans include tighter product selection, freshness and quality control, plus data-led pricing by urban business district to strengthen value and competitiveness.

• 2B plans target wider domestic and overseas distribution, customized gifts, exclusive fruit distribution rights and growth through Shenzhen Banguo; category brands will support supplier quality and output.