The growth rate of 1H21 net profit was in line with expectations, and the revenue growth rate was slightly lower than the expected 1H21 results. In the first half of the year, revenue fell 9.6% compared with the same period last year, the net profit from continuing operating activities was the same as the same period last year, and the net profit from home increased by 5.5%. The annualized ROAA decreased by 0.05ppt to 0.91%, and the annualized ROAE (disclosed value) decreased by 1.27ppt to 7.49%. The core tier one capital adequacy ratio is lower than at the end of last year. 0.06ppt to 10.60%1H21 revenue growth is slightly lower than expected, which we believe is mainly due to the company's reduced risk appetite and asset investment adjustment. The decline in revenue growth in the first half of the year was mainly due to a year-on-year decline in revenue from inventory sales and non-performing debt assets measured at amortized cost, partly offset by an increase in the fair value of other financial instruments.
l. Inventory sales revenue fell 53.1% from the same period last year, mainly due to the decline in the scale of 1H21 Cinda real estate delivery projects from a high base compared with the same period last year, and the gross profit margin of some projects was also affected by price restrictions and other regulatory policies. Cinda Real Estate is an important part of the bad main business of Cinda Group, which helps to digest real estate collateral.
2. The income of non-performing debt assets measured by amortized cost includes interest income and disposal profit and loss from the acquisition and reorganization of non-performing debt assets. 1H21 decreased by 16.4% compared with the same period last year, mainly due to the decline in the scale and yield of acquisition and reorganization of non-performing debt assets: the decline is mainly due to Cinda reducing risk appetite and reducing the speed of business expansion. The decline in yields is affected by the relatively loose liquidity environment, and the overall interest rate of the market goes down.
3. Changes in the fair value of non-performing debt assets and changes in the fair value of other financial instruments increased by 10.7% and 103.6% respectively compared with the same period last year, of which the fair value of acquired non-performing debt assets increased by 8.4% compared with the same period last year, and the fair value of debt-to-equity assets increased by 36% over the same period last year. We believe that the valuation of some investment projects has increased mainly due to the improvement in the domestic economic situation of 1H21.
In terms of business sectors, revenues in 1H21 non-performing asset management and financial services sectors fell 10.1% and 9.3% year-on-year, while pre-tax profits fell 10.2% and 6.1% respectively.
1. The revenue from the business of acquisition and operation increased by 7% 2% year-on-year, mainly due to accelerated disposal: the year-on-year growth rate was 8% 12%, and the air dropped to 11.8% from the same period last year. We believe that the decline in HR comes from the fact that Zi Xinda took the initiative to speed up turnover, and asset prices are still weak in the macro environment before the first snow. "in terms of new acquisitions, 1H21's newly acquired non-buttercup assets increased by 69.8% compared with the same period last year. Our reservation company has actively expanded acquisition channels such as trust, bank financial management, single household in Yindeng Center, etc., while maintaining a steady increase in public merger and transfer market share. two。 The non-performing business income of acquisition and restructuring fell by 16% compared with the same period last year, both the scale and the rate of return declined, the book value decreased by 11.6%, and the annual return on assets dropped to 76.6% compared with the same period last year. As mentioned above, Cinda reduced risk appetite, reduced acquisition and restructuring of non-performing sub-business expansion, assets according to the sub-structure, the real estate industry accounted for pyrene saddle army did not reduce 7.5ppt to 38.4%. Due to the decline in scale, the impairment ratio is 4.23% higher than that of the 32bp room, the balance of impairment assets is 2.0% higher than that at the end of last year, and the provision coverage ratio is 9.5% to 207.8% lower than that at the end of last year. 3. In the financial services sector, the income of 1H21 Southern Commercial Bank and Cinda Securities fell 18.9% and 6.1% year on year, while pre-tax profits decreased by 26.8% and 20.1% respectively. The leasing income of Golden Valley Trust and Cinda rose 33.1% and 33.1% compared with the same period last year, and the pre-tax profit rose 200.2% from the same period last year. The impairment loss of 7990.66s acquisition of restructuring non-performing assets decreased compared with the same period last year. The impairment loss of assets of the 1H21 Group decreased by 30.9% compared with the same period last year, of which the impairment loss of non-performing debt assets measured at amortised cost decreased by 70% compared with the same period last year, mainly due to the gradual recovery of the macro-economy of 1H21 after the epidemic.
Profit forecast and valuation
We basically maintain profit forecasts for 2021 and 2022. The current share price corresponds to 0.3 times price-to-book ratio in 2021 / 2022. Taking into account the regulatory guidance of non-performing assets companies to clear risks and focus on the main business, we expect the valuation center of the company to move down during the labor pains period. Maintain the outperform industry rating, but lower the target price by 16.2% to HK $1.86, corresponding to 0.4 times 2021 price-to-book ratio and 0.4 times 2022 price-to-book ratio, with 31.9% upside compared to current share prices.
Risk.
The company's asset quality performance is not as good as expected.