Jiumaojiu Earnings: Macro Challenges Linger, but Margin Levers Remain Intact; Shares Cheap

There is not much surprise in Jiumaojiu’s first-half 2024 earnings because the company already issued a profit alert back in July. Actual numbers are in line with the profit alert, with revenue growth of 6% compared with the same period last year and a net profit decline of 68%. While additional financial details offer deeper insights into the company's operations, they have not significantly altered our forecasts. Looking ahead, management expects double-digit year-over-year same-store sales declines in the third quarter, mirroring the second quarter’s conditions. But fourth quarter could see some improvements, benefiting from a lower comparative base. This is in line with our forecasts. Overall, we maintain our HKD 10.5 fair value estimate, and we continue to believe shares are undervalued.