The company recorded a total GMV of about 9.25 billion yuan in the first half of the year, an increase of 59.2% over the same period last year. Of these, 60.6% came from proprietary platforms, 26.5% from third-party platforms and 12.9% from supply chain finance. At the same time, small and medium-sized customers accounted for 58% of GMV in the first half of the year, while blue-chip customers accounted for 42%. During the period, the company recorded a total income of 5.65 billion yuan, an increase of 31.9% over the same period last year, and its net profit increased by 22.4% to 203 million yuan over the same period last year.
Main points of investment:
Small and medium-sized customers are growing strongly. Thanks to the strong growth in the number of small and medium-sized customers, the number of online registered customers in the company period reached 69137, an increase of 69.1% over the same period last year, and the number of trading customers reached 14952, a year-on-year increase of 99.8%, of which blue chip customers accounted for 1.2%, small and medium-sized customers accounted for 98.8%, and the customer conversion rate reached 21.6%. In the future, the company will further improve the online customer conversion rate by adding product SKU. At the same time, due to the relatively low cost of obtaining customers from small and medium-sized customers, the company's gross profit has been steadily improved. In addition, small and medium-sized customers have a shorter credit period than blue-chip customers, so the number of days of trade receivable turnover in the company has been shortened to 32.2 days from 45.2 days in the same period last year, and the operating index has improved accordingly.
The hard egg project is speeding up. At present, hard Egg has become the largest intelligent hardware service platform in China, attracting more than 12.5 million fans and more than 13000 IOT projects. Hard Egg platform began to promote intelligent hardware projects this year, and has been actively laid out in robots, smart cars, smart homes, new materials and other fields, including robots and smart cars, which can contribute revenue to the company. Hard Egg reached a cooperation with Intel Corp in early June, and the two sides will jointly build a robot ecosystem, including commercial services, family services and industrial robots, to further improve the ecological layout of the hard egg robot industry. Intel Corp will provide core chips and key modules for robot enterprises on the hard egg platform in the future. The company says the goal of the hard-egg robot ecosystem this year is to bring together more than 1,000 robot project teams and 300 upstream and downstream suppliers. Hard egg also released the hard egg super e-commerce strategy in the first half of the year, and reached a cooperation with JD.com crowdfunding, Taobao crowdfunding, and SUNING crowdfunding to help intelligent hardware enterprises on the platform dock with multiple crowdfunding platforms. at the same time, select high-quality projects to provide them with services of the whole industry chain, forming a hard egg crowdfunding ecosystem. Super e-commerce strategy is another upgrade after the hard egg completed the B2B2C closed loop. Brand marketing, advertising and supply chain services make the hard egg's future income more diversified.
The monetization process of hard eggs has begun to bear fruit. Hard eggs accounted for 22.4% of GMV in Q2, totaling 1.198 billion yuan, an increase of more than 100% over the same period last year. At present, the company gradually promotes the hard egg cash strategy from two aspects: 1) direct the project merchants on the hard egg platform to the company's own platform or third-party platform for the purchase of components, and have a business model on the platform to charge fees; 2) collect service fees according to the service requirements put forward by the project team, such as product design, marketing, financing, etc. In the future, with the gradual landing of projects in various areas on the platform, we expect that the proportion of GMV contributed by hard eggs will further increase in the second half of the year. In addition, the company has also begun to promote the "service-for-stock" strategy, which will form a stock pool by holding shares in the project company as a condition for providing services, which will give rise to more cash patterns for hard eggs.
Maintain the "highly recommended" rating with a target price of HK $15. The growth rate of the company's third-party platform and the monetization process of the hard egg exceeded our expectations. We adjusted the company's 16E/17E annual revenue to 125.3 and 16.05 billion yuan, while the rapid growth of small and medium-sized customers led to a steady increase in gross profit margin. We adjusted the company's 16E/17E annual return net profit to 4.51 yuan and 573 million yuan, corresponding to EPS of 0.39 and 50 Hong Kong dollars. The company has been selected into the shares of the Shanghai-Hong Kong Stock Connect and is expected to benefit from the opening of the Shenzhen-Hong Kong Stock Connect. At that time, more investors will participate in the future development of the company, and the valuation will be further improved. We maintain the company's highly recommended rating and raise the target price to HK $15, which is 30 times the 17-year PE.
Risk disclosure: the growth rate of the traditional manufacturing industry has slowed down and the hard egg is still in a state of loss.