1H22 performance is lower than we expected.
Aijian Group announced 1H22 results, operating revenue of 1.73 billion yuan, year-on-year-25.6%, home net profit of 560 million yuan, year-on-year-36.3%, ROAE year-on-year-2.8ppt to 4.46% during the reporting period, the performance was lower than we expected, mainly because the trust main business is still under pressure, coupled with market fluctuations, investment business-related income declined significantly. The total operating income of 2Q22 is the same as / month-on-month ratio-24% to 820 million yuan, and the return net profit is the same as-53% month-on-month ratio-12% to 260 million yuan.
Trend of development
The main business of trust has declined with the industry. The revenue of Aijian Trust 1H22 is-25% to 960 million yuan, the income contributes 55%, and the net profit is-26% to 510 million yuan. In the first half of the year, Aijian Trust focused on the standard business and actively promoted innovation transformation, but under the influence of triple economic pressure and epidemic situation, the company's trust performance declined with the industry (as of 1Q22, the scale of the trust industry interrupted and rebounded, with a month-on-month decline of 1.9% month-on-month). In addition, the first-half income of Aijian assets was-12% to 61.59 million yuan compared with the same period last year, the net profit reversed to 9.19 million yuan, the income of Aijian industry was-55% to 210 million yuan, and the net profit was-57% to 1.75 million yuan.
Aijian leasing performance has increased, aircraft / engine leasing is relatively stable under the epidemic. 1H22 revenue of Aijian Leasing is + 9.8% to 270 million yuan, revenue contributes 15%, net profit is + 25% to 85.48 million yuan. During this period, Aijian Leasing actively distributes "four new and one green" industries, ("four new" investment accounts for more than half, green financial concept projects account for 13%), and increases the "specialization and special new" customer group development and light assets inter-industry cooperation model. While Huarui Leasing, which is mainly engaged in aircraft / spare engine leasing, has year-on-year revenue of 4.1% to 220 million yuan, revenue contribution of 13%, and net profit of-4.3% to 47.16 million yuan. Under the influence of the epidemic, the business remains relatively sound.
The investment declined obviously with the market, and the impairment loss increased. In the first half of the year, the company lost 8.77 million yuan on joint venture investment (vs. Last year's income was 2.98 million yuan), excluding the investment business income after the joint venture (investment income + fair value change profit and loss)-92% to 27.03 million yuan compared with the same period last year. In addition, 1H22 credit and asset impairment losses increased from + 29% to 170 million yuan compared with the same period last year, mainly due to increased impairment losses on debt investments and other debt investments.
Profit forecast and valuation
Considering the impact of the epidemic and the triple pressure on the economy, the main business may still be under pressure, and coupled with the downward adjustment of the investment income assumption, we reduce the 23-year profit by 17.9% to 1.04 billion yuan / 1.15 billion yuan. The company trades on 0.72x/0.68x 2022 Universe 23e PCMB and maintains a neutral rating. The target price is lowered by 11% to 6.70 yuan, corresponding to 0.8x/ 0.8x 2022lap 23e Pmax B and 15% upside space, which is smaller than the earnings modulation mainly because the current valuation has partly reflected the market pessimistic expectations.
Risk
Trust and leasing business growth and asset quality are lower than expected; regulatory uncertainty.