Summary of the content:
Incident: China Holdings Co., Ltd. released its 2021 semi-annual report, achieving revenue of 511 million yuan, an increase of 2.61% over the previous year; Guimu's net profit was 695.302 million yuan, an increase of 21.15% over the previous year; after deducting non-net profit of 705.215 million yuan, an increase of 33.81% over the previous year, the performance was in line with expectations.
The main reason for the increase in revenue was the steady growth of the operating services business; operating costs were 320 million yuan, an increase of 1.9% over the previous year. The growth rate was lower than the revenue growth rate, which led to an increase in gross margin of 0.4 percentage points to 37.95%. Operating cash flow fell from 84,574 million yuan to -16.249 million yuan, a year-on-year decrease of 119.2%, mainly a decrease in sales payback compared to the same period last year. The company's short-term debt was 622 million yuan, accounting for 60.37% of total debt, while monetary capital was only 220 million yuan. The short-term capital chain was under pressure.
The company has signed or is tracking many investment and operation projects, and will enter the project implementation stage one after another. After the franchise project is completed and operated, the company can obtain a more stable income and cash flow by charging service fees. Furthermore, the company signed separate cooperation agreements with Changjiang Ecological Environmental Protection Group and China Power Construction Group, and the synergies are expected to be further reflected. It is estimated that in 2021-2023, the company's net profit attributable to the parent will be 183, 2.27, and 272 million yuan respectively, and the EPS will be 0.90, 1.12, and 1.35 yuan respectively. Based on the current closing price of 9.87 yuan, the corresponding PE will be 10.97, 8.81, and 7.31 times respectively, giving the company a “recommended” investment rating.
Risk warning. The risk of insufficient capital, the risk of accounts receivable recovery, the company's performance falling short of expectations, vicious market competition, systemic risks in domestic and foreign secondary markets, the risk that domestic and foreign epidemics worsened beyond expectations, and domestic and foreign economic recovery fell short of expectations.