Breo(688793) 华创证券·2024-09-09 12:08Investment Rating - The report downgrades the investment rating for the company to "Recommend" with a target price of 39 RMB, compared to the current price of 33.04 RMB [1] Core Views - The company's overall revenue is under pressure, but profitability has significantly improved [1] - Despite weak domestic consumption, the company's overseas business has shown strong growth, particularly through platforms like Amazon and Shopee [1] - The company has optimized its marketing expenses and streamlined offline stores, leading to improved profitability [1] - The company is expected to accelerate its development through new product iterations and overseas market expansion [1] Financial Performance - In H1 2024, the company achieved revenue of 600 million RMB, a year-on-year increase of 0.7%, with net profit attributable to shareholders of 30 million RMB, a year-on-year increase of 203.1% [1] - In Q2 2024, revenue was 310 million RMB, a year-on-year decrease of 16.5%, while net profit attributable to shareholders was 10 million RMB, a year-on-year increase of 144.7% [1] - Gross margin in H1 2024 was 61.8%, an increase of 1.8 percentage points year-on-year, driven by higher sales of high-margin products [1] - The net profit margin in H1 2024 increased by 8.5 percentage points year-on-year to 4.3% [1] Product and Regional Breakdown - In H1 2024, revenue from shoulder, eye, neck, and scalp+head products was 220 million RMB, 70 million RMB, 70 million RMB, and 120 million RMB, respectively, with year-on-year changes of +28.2%, -33.0%, -46.2%, and +140.0% [1] - Domestic market revenue in H1 2024 was 570 million RMB, a slight decrease of 0.3% year-on-year, while overseas market revenue was 30 million RMB, an increase of 21.5% year-on-year [1] Future Outlook - The company is expected to benefit from the growing demand for small massage devices driven by health awareness, aging population, and increasing demand for youth care [1] - The company is expanding its domestic e-commerce and overseas channels, as well as adopting a new business model of provincial retail service providers to tap into new markets [1] - The company's profitability is expected to improve further with the launch of new products and continued overseas expansion [1] Financial Forecasts - The report adjusts the EPS forecasts for 2024 and 2025 to 0.69 RMB and 0.89 RMB, respectively, and introduces a new EPS forecast for 2026 of 1.18 RMB [1] - The PE ratios for 2024, 2025, and 2026 are projected to be 48x, 37x, and 28x, respectively [1]