Sichuan Baicha Baidao Industrial (2555) H1 2024 earnings summary

Executive summary

• H1 revenue fell 10.0% YoY to RMB2,395.8m; profit for the period declined 59.9% to RMB238.6m, while adjusted net profit was RMB394.9m.

• Mainland stores rose 20.6% YoY to 8,385; the overseas network comprised four stores in South Korea, two in Thailand and one in Australia.

• Franchisee support and marketing investment weighed on profitability amid intensifying competition; priorities include expansion, product R&D, supply-chain and technology investment, and cost control.

Financial highlights

• Revenue was RMB2,395.8m, down 10.0% YoY; gross profit was RMB760.1m, down 18.6%. Gross margin fell 3.4 percentage points to 31.7%.

• Profit before tax was RMB309.4m versus RMB705.4m; profit for the period was RMB238.6m versus RMB595.4m, and profit attributable to owners was RMB237.0m versus RMB588.2m.

• Adjusted net profit was RMB394.9m versus RMB598.0m; adjusted net profit margin was 16.5% versus 22.5%.

• Other income rose to RMB24.8m from RMB2.2m, mainly from bank interest on funds following pre-IPO investments and listing proceeds.

• Distribution and selling expenses rose 140.2% to RMB105.2m; administrative expenses rose 17.0% to RMB218.4m; R&D expenses rose 154.4% to RMB14.5m.

Outlook and guidance

• H2 priorities: expand domestic stores and explore overseas markets; broaden product range, strengthen R&D and supply-chain capabilities, invest in technology, and improve operational efficiency.

• Management plans stronger cost control and prudent risk management amid competition and changing consumer behaviour; no numerical earnings guidance was stated.

• H1 product development included 21 new launches, 9 upgrades and 203 formulas developed for the Chinese market.