Breo(688793) 申万宏源·2024-08-27 09:03Investment Rating - The report maintains an "Overweight" rating for the company [1][4] Core Views - The company's H1 2024 performance met expectations, with a significant year-on-year improvement in profitability [1][3] - Revenue reached 604 million yuan, up 1% YoY - Net profit attributable to parent company was 26 million yuan, turning positive YoY - Non-GAAP net profit was 24 million yuan, also turning positive YoY - Q2 2024 saw a 16% YoY revenue decline to 310 million yuan, but profitability improved significantly [3] - Gross margin reached 60.92%, up 0.30 percentage points YoY - Net margin was 3.39%, up 9.56 percentage points YoY - The company has achieved profitability for two consecutive quarters, indicating continuous operational improvement [3] Channel and R&D Development - Channel optimization continues with 133 directly-operated stores and 63 franchised stores as of June 30, 2024 [3] - 10 fewer directly-operated stores but 19 more franchised stores compared to end of 2023 - New provincial retail service provider model effectively penetrates lower-tier markets - Online sales expanded through diversified e-commerce platform cooperation and new retail models [3] - Overseas channels developed through platforms like Amazon and TikTok, with local subsidiaries supporting offline expansion [3] - R&D made progress in four core systems: bionic, high-power, TCM diagnosis, and health management, enhancing product competitiveness [3] Financial Projections - Profit forecasts slightly lowered but still show strong growth [4] - 2024-2026 net profit projections: 62, 84, and 118 million yuan respectively - Corresponding YoY growth rates: positive, +34.4%, and +41.0% - Current P/E ratios: 43x (2024), 32x (2025), 23x (2026) - Key financial metrics show improvement [5] - 2024H1 gross margin: 61.8% - ROE: 6.7% (2024H1), projected to reach 17.6% by 2026 - EPS: 0.31 yuan (2024H1), projected to reach 1.37 yuan by 2026 Fundraising Projects - Marketing network construction project reached 84.69% completion by end of 2023 [8] - 123 stores established using raised funds, 49.60% completion rate - Expected to reach operational status by end of 2024 - R&D center upgrade and IT upgrade projects may face further delays [8] Historical Financial Performance - 2023 saw significant revenue growth but negative profitability [9] - Revenue: 1.275 billion yuan, up 42.3% YoY - Net loss: 51 million yuan - 2024 projections show recovery and growth [9] - Revenue: 1.401 billion yuan, up 9.9% YoY - Net profit: 62 million yuan, turning positive - Gross margin: 60.9%