On July 15, 2022, Xuhui Yongsheng Service disclosed the announcement of "increasing the shareholding of the controlling shareholder". From July 12 to 14, the company disclosed the announcement of share repurchase; the company's affiliated Fang Xuhui Holdings Group continued to disclose the announcement on the increase of equity holdings and the purchase of corporate bonds by the controlling shareholders and directors from June 24 to July 15.

The increase of shareholders' holdings and the company's buyback stick to the value

1) the controlling shareholder has full confidence in the long-term development of the company: according to the announcement on July 15, the controlling shareholder has purchased 500000 shares of the company in the open market, with a total consideration of about HK $3.35 million. After the increase, the controlling shareholder holds a total of 52.79% of the issued shares of the company. 2) the falling market continues to repurchase to safeguard the interests of shareholders: according to the announcement, the company repurchased 500000 shares, 500000 shares and 94000 shares on the 12th, 13th and 14th day respectively.

In the downward period of the industry and the company's stock price, the increase of the controlling shareholder's shareholding and the company's share buyback are carried out at the same time, which reflects the controlling shareholder's recognition of the company's value and the management's maintenance of the interests of the majority of shareholders.

Xuhui Group continues to inject cardiotonic agents into the market.

1) controlling shareholders and senior executives increase their holdings of group stocks and buy bonds: the controlling shareholders and directors of Xuhui Group increased their shareholdings in the company on July 13 and 15, respectively. The CEO and CFO also announced the purchase of corporate bonds on July 7, June 28 and June 24, respectively. 2) Xuhui Group operates steadily: according to the announcement of Xuhui Holdings Group, the company achieved cumulative contract sales of 63.1 billion from January to June, with a contract sales area of 4.14 million square meters; 3) the financing channels are smooth, and 500 million of the first tranche of corporate bonds have been issued in 2022: on June 27, the company completed the first tranche of 2022 corporate bonds with a scale of 500 million yuan and a coupon of 5.5%.

Xuhui Group's sales in the first half of the year were in line with expectations, and its successful refinancing reflected the recognition of financial institutions. Increasing holdings and buying bonds further bound the interests of senior executives of major shareholders and the majority of investors, showing the company's determination to stick to the end.

Investment advice: the company relies on high-quality private developers, has excellent management, positive development without losing stability.

At present, the company is affected by the lower-than-expected decline in the real estate industry and market concerns about related party risks, the recent market performance is weak, but the controlling shareholders and the company are actively increasing their holdings and buybacks. At the same time, the associated Fang Xuhui Group is also actively increasing its holdings and buybacks in the secondary market. As a benchmark for high-quality private enterprises, we are optimistic about the growth of the company's long-term performance. It is estimated that the company's EPS in 2022-2024 will be 0.53 and 0.73 per share respectively, maintaining a "buy" rating.

Risk hint: the delivery progress of residential property affected by the decline of the real estate industry is lower than expected, the competition of third-party extension is more intense than expected, and the profit margin of extension project is lower than expected.