CICC: Keeping Bruco (00325) outperforming the industry rating target price of HK$90
The Zhitong Finance App learned that CICC released a research report stating that it will keep Bruco's (00325) 26/27 adjusted net profit forecast of 88/1.07 billion yuan unchanged. The current stock price corresponds to 17.6/13.9 times P/E in 26/27, maintaining an outperforming industry rating and target price of HK$90, corresponding to 22.3/17.6 times P/E in 26/27, with 26.8% upside.
CICC's main views are as follows:
1H26 results surpassed expectations
The company announced 1H26 results: revenue of 1.78 billion yuan, an increase of 32.7%, in line with the forecast. Among them, adult sales and overseas share climbed ahead of the forecast; adjusted net profit of 401 million yuan, an increase of 25.1%, surpassed the forecast, mainly due to continuous cost optimization, and the gross margin of new products climbing better than expected. At the same time, the board of directors declared an interim dividend of HK$0.3247 per share.
1. Building block cars and adult lines are growing rapidly, and going overseas has entered a period of acceleration
1) By category, the revenue of building character toys was 1.59 billion yuan, an increase of 19.6%; the revenue of building block cars was 190 million yuan, accounting for 10.4% of the total revenue, and sales were still excellent after the price increase. 2) Looking at the classification, 16-year-old + product revenue increased 124% to 440 million yuan, accounting for the same increase of 10.2ppt to 25%; 9.9 yuan product revenue also increased 61% to 350 million yuan, accounting for 19.5%, year-over-year/month-on-month +3.4/-1.1ppt. The company expects to stay within 20% for the whole year. 3) Domestic/overseas revenue also increased 15%/229% to 1,41/370 million yuan. Among them, revenue from other regions such as America/Asia/Europe also increased 349%/111%/365%. The bank believes that it mainly benefited from IP expansion and channel accumulation and release.
2. Gross margin is affected by the short-term product structure, and the cost ratio is continuously optimized
The gross profit margin of 1H26 was 44.3%, down 4.1ppt. The bank believes that the main reason is that there are many new products and early model amortization, the production of building blocks is still in the run-in period, and the 9.9 yuan product line accounts for a year-on-year increase. The total cost rate decreased by 3.4 ppt year on year, and operational efficiency improved steadily. Among them, the R&D rate was reduced by 2.2 ppt, and the operating leverage was obvious. Under the combined impact, the adjusted net interest rate was 22.6%, down 1.3ppt. The bank believes that the profit margin is expected to increase steadily as mold allocation and overseas storage are all upfront investments, and subsequent dilution with volume and continuous cost reduction for building block cars.
3. Advance the three-pronged strategy in depth and be optimistic about the company's potential for globalization
Overseas, the channel side increased penetration in North America, and Europe expanded into new regions; the IP side was further diversified, the share of Transformers declined, and Japanese IP was popular in Europe and America. The operating BFC competition/overseas fan community and after-sales system cover 17/42 countries, and the fan creation ecosystem continues to be rich. The category side will further focus on categories that have been verified and can be scaled up. Building block cars will accelerate differentiated construction, and naturally focus on collecting and increasing customer demand. The bank continues to be optimistic about the company's diversified growth momentum under the three-pronged strategy.
Risk warning: Increased competition, loss of authorized IP, new products falling short of expectations, fluctuating raw material prices.