Revenue increased, and net profit declined. 2022H1's revenue was 1,127 million yuan, up 11.3% year on year; revenue for the second quarter was 658 million yuan, up 10.1% year on year. Net profit of Guimo was 115 million yuan, down 38.3% from the previous year; after deducting net profit of Fimo was 56 million yuan, down 54.4% year on year. Net profit for the second quarter was 80 million yuan, a year-on-year decrease of 45.9%; net profit of non-return mothers was 52 million yuan, a year-on-year decrease of 46.2%.
Gross margin declined due to increased investment in developing own industries. The gross margin of the 2022H1 was 25.6%, -7.8pp compared to the previous year. The main factors behind the decline in gross margin include: 1) the increase in raw materials, labor and logistics costs in the new materials business sector; 2) the restructuring of the company's business structure and the reduction in revenue from the high-margin promotion service business.
The company's expenses increased compared to the same period last year. The company's expenses increased compared to the same period last year. Among them, the sales expenses ratio was +0.5pp to 4.2% over the same period last year; the management expenses ratio was +0.7pp to 11.9%; the R&D expenses rate was +1.0pp to 5.3%; and the financial expenses ratio was +1.5pp to 4.3% over the same period last year. The sharp increase in financial expenses is mainly due to the increase in bank loans and medium-term notes in the reporting period compared to the same period last year, as well as the completion and acceptance of subsidiary park projects, and the costing of interest expenses. The long-term financial expense ratio will be kept at a lower level.
The profit side is under pressure. The rise in costs and expenses, as well as the impact of the company's investment in incubated companies by fluctuations in stock prices in the secondary market, decreased profit and loss from changes in fair value compared to the same period last year, leading to a decline in investment income and pressure on the profit side. The operating profit margin was 9.6%, year-on-year - 13.9 pp; net profit margin was 10.2%, year-on-year - 9.3 pp.
Net operating cash outflow decreased year-on-year, and the balance ratio was relatively stable. As of the semi-annual report, net operating cash flow was -226 million yuan. Compared with the same period last year - 368 million yuan, the net outflow was reduced.
The balance ratio was 48.83%, +0.44pp compared to the same period last year, which remained stable.
Segment: The main business grew steadily, and the science and technology innovation service sector declined due to strategic adjustments. The new materials industry/innovation base platform service/technological innovation operation service/digital economy business achieved revenue of 7.67/286/0.44/012 million respectively, +13%/+23%/-38%/-16%, respectively. The company's main business of new materials related to cosmetic packaging, as well as covering “incubators - accelerators - industrial parks”
The innovation base platform service business, which relies on a full range of space carriers, is growing steadily. The system promotion business in the science and technology innovation service sector declined compared to the same period last year. The main reason was that the company made strategic adjustments to the business, gradually adjusted the system promotion revenue to the innovative service+industry cultivation cooperation model, and sought long-term industrial development benefits for companies in various regions.
Risk warning: The epidemic has repeatedly impacted; raw material prices have fluctuated; investment project returns have fallen short of expectations.
Investment advice: I am optimistic about the robustness of the company's traditional business and the gradual post-investment effects of science and innovation business. We raised our profit forecast for the company. We expect net profit for 2022-2024 to be 639/745/889 million yuan respectively, an increase of 1.3%/16.5%/19.4% over the previous year. Maintain the “buy” rating and a reasonable valuation range of 12.81 to 13.35 yuan. The reasonable valuation corresponds to 20.6-21.5x PE in 2023.