The first-half performance was 65.62 million yuan, lower than expected.

Haiyin shares announced its results in the first half of 2017: operating income was 959 million yuan, down from the same period last year; net profit belonging to the parent company was 65.62 million yuan, down 31.8% from the same period last year, corresponding to earnings per share of 0.03 yuan. From a quarterly point of view, 2Q/1Q revenue is 1.4% year-on-year, net profit is-51.3% compared with the same period last year, and operating performance declined significantly in the second quarter.

Real estate and entertainment businesses are a drag on revenue, while financial and commercial businesses are growing well. The decrease in sales confirmed by real estate in the first half of the year led to a decline in revenue by 64.8%. As the new phase of products reached a state of pre-sale in the second half of the year, it is expected to contribute profits to the company's 2017 real estate business and recover the decline in profits in the first half of the year; entertainment business revenue declined due to internal integration; financial business revenue in the first half of the year was 105 million yuan (more than 100 million yuan for the first time), an increase of 183.6 percent over the same period last year. The revenue of the commercial operation business in the first half of the year was 448 million yuan, an increase over the same period last year; the revenue of the department store / hotel business in the first half of the year was 5.1% 12.4% respectively compared with the same period last year.

Profitability has declined significantly, and cost control needs to be strengthened. Affected by factors such as the impact of e-commerce and rising operating costs, the company's gross profit margin in the first half of the year fell 5.8 percentage points compared with the same period last year, of which the gross profit margin of business / hotel / real estate / financial / cultural business decreased by 10 percentage points respectively; poor cost control; sales / management / wealth

The service expense rate is 0.4 percentage points respectively-2.2 pound "2.9 pound". Overall, the net interest rate fell by one percentage point to 6.8%.

Trend of development

Actively layout business and financial business, two-wheel drive to promote future growth. ① business: on the one hand, carrying out multiple layouts, marching into projects such as intelligent warehousing and creative industry parks to help build a "Dahaiyin" business platform; on the other hand, actively storing high-quality commercial property projects. The "Centennial East Street" project in Shaoguan was launched in May 2017, implementing the strategy of "going out of Guangzhou and realizing development in different places". ② Finance: take Haiyin Financial Control as the platform, launch small and micro finance, financial leasing, factoring, payment and other services, and initiated the establishment of Huacheng Life Insurance and other companies, the financial format is increasingly rich. The company's previously issued 1.1 billion convertible bond conversion share price is 5.26 yuan, and the current share price is about 29% lower than the conversion price.

Profit forecast

We cut our earnings per share forecasts for 2017 and 2018 by 23% and 20% from 0.11 yuan and 0.11 yuan, respectively.

Valuation and suggestion

At present, the company's share price corresponds to 2018E33XPE. We maintain our recommended rating, but lower our target price by 19.3% to RMB 4.60, which is 23.99% upside from the current share price.

Risk.

The progress of commercial projects is lower than expected, real estate settlement fluctuates, and the risk of cross-border M & An integration.