CROSBY Research – Pagoda (2411 HK): Widening NPM on operational efficiency and cost savings

22 Aug 2023

The company reported a 6.4% YoY increase in topline to Rmb6,294m in 1H23, with sales of fruits and food products up by 6.7% YoY to Rmb6,117m. The sales increase was driven by i) a 9.3% YoY increase in retail stores, from 5,451 by end-1HFY22 to 5,958 by end-1HFY23, and ii) a 34.7% YoY increase in its B to B direct sales channel on the back of scale expansion in further development of its B to B biz, and also extending its sales network in both domestic and overseas market. GPM was slightly down by 0.2ppt YoY to 11.3% as fruit costs are relatively stable during the period.