The growth of each business in the first half of the year is steady, and the revenue and profit are in line with our expectations.
Revenue rose 188 per cent year-on-year to 1.34 billion yuan, while net profit attributed to the parent company increased 270 per cent to 107 million yuan. Several aspects that support the rapid growth of revenue: 1) the growth rate of the company's main business is accelerating (B2B1.0 revenue includes Internet products, industrial and commercial yellow pages and catalogs, and offline meetings increased by 31.3% over the same period last year. The growth rate in the previous two years was about 10-15%); 2) Huijia Interactive enriched mobile products and technologies, and mobile revenue grew rapidly; 3) the company's revenue in the direction of the Internet of things (anti-counterfeiting) nearly doubled; 4) successfully carried out consignment business, quarterly revenue of about 500 million yuan, is expected to exceed 1 billion yuan in the second half of the year From the above points, we can see that the company's revenue structure is more optimized (mobile, Internet of things, B2B2.0), and the potential is gradually released.
Affected by the decrease in expected return of Ketong Core City equity, it has passed.
Due to the business attributes of the B2B2.0 platform, the company, as the investor of several B2B trading companies (Jingzan Technology, Steel Silver, Xinzhi Holdings, etc.), became its cornerstone investor when it was listed in Ketong Core City, but it was affected by the shorting of Ketong Core City, which resulted in a certain loss of fair value. At present, the company has withdrawn from all the shareholdings of Ketong Core City, and the negative impact has passed.
Continuously strengthen its advantages in five major industries, more than a dozen medium-sized industries, and dozens of subdivided industries.
The company continues to strengthen its advantages in five major industries (iron and steel, chemical industry, clothing, IC, 3C and small household appliances) to build closed-loop capabilities from information services to transactions. The company has invested in more than a dozen Internet vertical platform companies in subdivided areas, and laid out the financial layout in four directions: small loans, factoring, financial leasing, and banks. This year and next year will be two years of deep integration of finance and the Internet. The proportion of closed loop (information to transaction) will continue to increase.
Richer and stronger financial instruments will help Internet business take off.
In June 2017, the company announced a framework agreement with China Digital Holdings Co., Ltd., concerning the acquisition of the remaining 60% of Chongqing small loan. If the transaction is completed within this year, the company will wholly own Chongqing small loan (national license), and will achieve strong business growth next year.
Investment suggestion
Affected by non-recurring profits and losses, we adjusted the company's 2017-2018 net profit to 260 million yuan and 360 million yuan, an increase of 171% and 39% over the same period last year. We believe that the company is a scarce target with a clear strategic layout and sustained growth in the Aamp H market, maintaining a buy rating and a reasonable valuation of $9.
Risk hint
1. The slow progress in the integration of multiple Internet vertical platforms has led to a lower than expected growth rate of the company's Internet.
2. The systemic risk of Hong Kong stocks: the Fed's interest rate hike prompts funds to withdraw from Hong Kong stocks, which has a negative impact on the market.
