Incident: The company released its 2022 three-quarter report. The first three quarters/single three quarters of 2022 achieved operating income of 891/270 million yuan respectively, +5.29%/-11.32% year on year; realized net profit of 7.65/243 million yuan, +17.79%/+27.40% year on year; net profit after deducting non-recurring profit and loss was 747/237 million yuan, +17.04%/+26.42% year on year.
Key points of investment
Revenue performance was basically in line with expectations: in September 2022, the company sold its wholly-owned subsidiary Zunyi Lifeng (cement company); as of June 2022, the company's private equity business segment accounted for 93% of revenue. We expect that with the further divestiture of the building materials business, the core position of the company's private equity business will be further highlighted, and future revenue growth will be mainly affected by management fees and performance compensation (carry). The revenue performance of 2022Q1-3's private equity business was stable (+5.3% year-on-year to 891 million yuan). The year-on-year decline in Q3 single-quarter revenue was mainly due to the fact that investment projects (first phase funds) had already entered an exit period, management fee revenue was affected, and Carry has not yet been realized; we expect future fund size expansion to raise the management fee revenue center.
Guimu's net profit increased steadily: 1) Joint fund profit, and investment income continued to be positive feedback: 2022Q1-3's investment income was +305.3% year-on-year to 936 million yuan. The increase in investment income was mainly due to an increase in joint fund profit+changes in the shares held by subsidiaries: ① An increase in joint fund profit: the profit of the 2022Q1-3 company's investment in allied ventures and joint ventures increased by +194.6% over the same period last year to 670 million yuan; ② changes in investment income due to changes in the method of accounting for shares held by subsidiaries. 2) The market environment is weak, and fair value losses due to fluctuations in the net value of direct investment projects: the A-share and Hong Kong stock markets both fluctuated in the first three quarters of 2022, and the company's stock prices of listed targets fluctuated, which affected the net worth of private equity funds (as of the end of September 2022, the closing price of Xiaopeng Motor's H shares held by the company was 75.3% lower than at the beginning of the year); fluctuations in the net value of direct investment projects caused the company to lose 314 million yuan in 202Q1-3, a decrease of 511 million yuan from 2021Q1-3 (earnings of 197 million yuan). We expect the company to lose 511 million yuan in fair value from 2021Q1-3 (earnings of 197 million yuan). The company will gradually reduce its holdings of relevant targets in 2023, and the performance of this data will improve.
Profit forecasting and investment ratings: We believe that Sichuan Shuangma's direct investment and private equity investment management business will become a new performance growth point, leading to development exceeding expectations; however, considering the current weak macro environment and the recovery of economic fluctuations, we lowered the company's net profit forecast for the company's Fumo of 2022-2024 to 10.92/15.48/2,065 billion yuan (previous value was 14.41/19.96/2,299 billion yuan), corresponding to 13.18/9.30/6.97 times P/E, respectively, maintaining the “buy” rating.
Risk warning: 1) Regulatory policies related to private equity have been tightened; 2) the company's operations have been affected by repeated epidemics; 3) the macroeconomic slump, private equity management business fund-raising fell short of expectations; 4) capital market sentiment declined, and project withdrawals fell short of expectations; 5) The cement business dragged down the company's business.