Event: on August 30, 2022, China Holdings released its semi-annual report of 2022, saying that in the first half of 2022, the company achieved operating income of HK $8.682 billion, an increase of about 0.1% over the same period last year, and a net profit of HK $222 million, an increase of 0.7% over the same period last year.

Sound operation, orders & customers continue to develop. In the first half of 2022, under the severe challenges facing the global economy, the company achieved HK $8.682 billion in revenue, a slight increase over the same period last year. Big data's business achieved rapid growth, but the decline in traditional services affected revenue performance; the return net profit was HK $222 million, a slight increase over the previous year. The company has plenty of orders on hand and has signed an unsold amount of HK $7.177 billion. The company has a diverse customer structure and a large number of customers, and maintains a leading position in the industry. The income of Top30 customers accounted for 47%, with a compound growth rate of 79% in the past two years. The number of major customers above 10 million levels reached 120, with a compound growth rate of 12% in the past two years. Supply chain customers continued to be stable, with a net income retention rate as high as 111%. The number of new customers was 1648, up 20% from the same period last year.

Focusing on big data's strategy, the business structure is continuously optimized. Since the company focused on big data's strategy in 2018, it has unswervingly promoted the strategy along the established technology roadmap. In terms of business, big data's income from products and solutions increased from HK $1.181 billion to 14%, HK $2.761 billion from software and operating services, and HK $4.817 billion from traditional services, accounting for 54%. Software and operation service business and traditional service business can not only provide stable cash flow for the company, but also serve as the support of big data's business. With the continuous and rapid improvement of big data's income and gross profit, it will bring more positive changes in the company's business layout and profitability.

The rapid development of big data's business has helped the second growth curve. Benefiting from the landing of the national digital economy strategy and the improvement of downstream demand, the company's big data business has achieved rapid growth. Big data's income from products and solutions was HK $1.181 billion, up 50 per cent from the same period last year, while gross profit was HK $449 million, up 56 per cent from the same period last year.

Through the establishment of three major research institutes and industrial incubation funds, the company continued to increase technological research and development. Big data's product standardization was further improved, with a gross profit margin of 83%, an increase of 16 percentage points over the same period last year, and a total of 2392 software copyrights and patents. Led and participated in the formulation of 23 industry standards and white papers, including data fusion and application scenarios in areas such as digital twins, smart cities, financial technology, etc.

Investment suggestion: with the general trend of the digital economy, the company seizes the opportunity to continuously accelerate big data's strategy, build a more perfect R & D and product system, deeply cultivate existing customers and expand incremental customers, give full play to the channel function of traditional services, the scene value of software and operational services, and realize the expansion of big data's business. It is estimated that the operating income of the company from 2022 to 2024 is 198.16 yuan, 241.75 yuan and 28.769 billion yuan respectively, the return net profit is 8.04,10.51 yuan and 1.293 billion yuan respectively, and the EPS is 0.43,0.57,0.68 yuan per share respectively. Maintain a "buy" rating.

Risk hint: business expansion is not as expected; market competition intensifies.