Event: the company released its semi-annual report for 2021: the income in the first half of the year was 1.753 billion yuan, an increase of 120.52% over the same period last year; the net profit was 26.69 million yuan, a substantial improvement over the loss of 213 million yuan in the same period last year; and 12.93 million yuan was deducted from the same period last year. A substantial improvement over the loss of 259 million yuan in the same period last year.

The traditional sector and the innovation sector went hand in hand, and the gross profit margin and expense rate returned to the normal level: in the first half of 2021, under the "32nd" strategic plan, the implementation of strategic transformation was accelerated, and various businesses made breakthroughs, resulting in new and better corporate profitability and greater industry influence. Revenue in the first half of the year increased by 120.52%, of which Q1 and Q2 increased by 183.60% and 83.58% respectively compared with the same period last year. In terms of quarter-by-quarter and business-by-business, the revenue of smart medical and health care in the first half of the year was 780 million yuan, an increase of 88% over the same period last year; that of smart government was 742 million yuan, an increase of 176% over the same period last year; and that of Internet services was 230 million yuan, an increase of 107% over the same period last year. In the first half of the year, the company's overall gross profit margin was 34.66%, up 6.36 percentage points over the same period last year, and the gross profit margin returned to normal. In the first half of the year, the company's expense rate, sales expense rate, management expense rate, R & D expense rate and financial expense rate decreased by 23.02%, 3.09%, 4.9%, 10.58% and 4.45% respectively compared with the same period last year. Benefiting from a sharp increase in gross profit margin and a decline in expense rates, the company turned its profits from losses to profits.

Bull Health focus 2.0 strategy iteration, the number of users increased rapidly: during the reporting period, Bull Health focus 2.0 strategy iteration, focusing on the implementation of Bull Health APP2.0 Health Care Edition upgrade. On January 25, 2021, Hainan Manniu Health Internet Hospital and Hainan Muniu Health Telemedicine Center successfully obtained the practice license of medical institutions. On March 11, Mini Program of Hainan Manniu Health Internet Hospital ("Dr. Buniu") was officially launched.

With the continuous improvement of the ability of insurance science and technology at both ends of "Bull partner" and "Bull Manfu", the strategic layout of Bull Health has become more clear: to start strategic upgrading with the two-wheel drive of "health management + insurance technology". Manniu Health APP added 875700 registered users in the first half of the year, an increase of 208.3% over the previous month, bringing the cumulative number of registered users to 1.3028 million. During the reporting period, centering on the establishment of a disease-specific health management platform, Bull Health launched the research and development of business lines in the field of vertical specific diseases, gradually improved the chronic disease management and service process, laid the foundation for iterative upgrading of APP3.0 chronic disease version of Bull Health, and strengthened its own capacity building.

Profit forecast, valuation and rating: taking into account the company's faster-than-expected expansion of traditional and innovative business and accelerated expansion of innovative business in the first half of the year, the forecast of net profit for 21-22 years is raised to 2.67 yuan and 385 million yuan respectively (up 1.14% and 4.90% respectively over the same period last year). At the same time, the company's 23-year net profit is expected to be 571 million yuan. The company is optimistic about the performance growth brought by the new momentum and innovative business that Guoshou brings to the company as a leading enterprise in medical informatization.

Risk tips: coordination with Guoshou is not as expected; Bull Health, Citizen Cloud, Health Cloud and other innovative business development is not as expected; increased competition in the industry leads to a reduction in gross profit margin.