1H22 results are in line with our expectations, Value Partners announced 1H22 results: total revenue was -53% to HK$330 million, total net revenue was -51% to HK$220 million, and net profit to mother turned loss to HK$430 million (VS.1H21 profit of HK$210 million; loss of about HK$435 million from the company's previous profit warning announcement), which was basically in line with our and market expectations. The year-on-year decline in performance was mainly due to the decline in the company's management fees and performance fees and combined investment income recorded losses under market fluctuations. Development trend management fees and performance fees were pressured, and proprietary investments recorded losses. 1) Management fee: Revenue 1H22 -39% YoY to HK$310 million, corresponding to AUM -42% YoY/-25% to US$7.5 billion compared to the beginning of the year, mainly due to a net capital outflow of US$660 million recorded during the reporting period (subscription of US$660 million +redemption of US$1.32 billion) compounded fund losses of US$1.76 billion (VS.1H21 positive return of US$70 million), annualized management rate of -3 bps to 95 bps (increase in the proportion of products with lower rate rates), and net management fee after deducting distribution channel rebates - 2 bps Up to 57 bps; 2) Performance fee: Revenue of -99% to HK$896,000, mainly due to market fluctuations, most fund performance failed to surpass their new high prices, corresponding to 1H22 overall fund performance -17.9% (with the two major equity flagship products, Value Partners Value Fund -14.3% /Value Value Fund -21.8%); 3) Investment income: net investment income recorded a loss of HK$320 million (VS.1H21 income of HK$32.96 million), mainly due to the initial investment capital loss of its funds; 4) Strict cost aspects: book Overall operating expenses under management were +5% YoY to HK$260 million. Product richness and geographical distribution/channel coverage continue to expand. 1) Product: 1H22 product AUM share - 75% absolute return, 14% fixed income, 6% diversified assets, 2% alternative investment, 3% quantitative and ETF; in terms of product development, the company launched an emerging market network and e-commerce ETF in July to further expand the company's ETF strategy. At the same time, after launching the first ESG-themed product in Japan in 2021, the company plans to continue to promote ESG funds in other markets in the second half of 2022; 2) Region/Channel: Customer AUM Regional Distribution - Hong Kong, China 62% /Europe 14%/Mainland China 9%/Japan 5%/Singapore 5%/US 1%/Other 4%. Among them, European institutional clients increased their commissioned investment amounts to +2ppt, and the company is also actively expanding its business in Southeast Asia/North America. Actively strengthen the mainland China market. At the end of 1H22, the company's mainland China business AUM was US$63 billion, accounting for 8.4%. Among them, the company announced that it is actively seeking wholly-owned or majority controlling interests in domestic public fund management licenses. At the same time, three funds have already been sold by approved banks under the Greater Bay Area Cross-border Wealth Management Connect Program. Profit forecasting and valuation took into account the impact of market fluctuations on investor sentiment and investment performance, reducing 2022/2023 profit by 97%/19% to HK$0.1/360 million. The company is currently trading at 2023e 5.7% P/AUM and 10xP/E; the target price was lowered by 29% to HK$3.4, which corresponds to 2023e 8.0% P/AUM and 40% upward space; maintaining an outperforming industry rating. Risk Market fluctuation risk; market competition exceeds expectations; business development falls short of expectations.