Summary of investment

Xinyi is the leading information provider in Hong Kong, the neutral data center contractor. Niigata Base Corporation (16.HK) holds 74.04% of the shares. In the mid-term market on February 22, the revenue during the period reached HK $760 million, up 18.5% from the same period last year. However, our expected interest-bearing equity ratio will increase significantly. I offer HK $5.82 to the target label.

As the stock market has clearly rebounded recently, we have moved down to "overweight", with an increase of about 5.05%. (as of 26 February)

Please update

In the mid-term market on February 22, the revenue during the period reached HK $760 million, up 18.5% from the same period last year. However, the gross profit margin decreased from 59.3% to 57.2% compared with the same period last year, mainly due to the increase in discount expenditure and the pre-use of new customers in MEGA Plus and MEGATwo. In addition, the ratio of cost to income has also increased, with sales and expenses accounting for 1.86% of income, up 0.05% from the same period last year, and administrative expenses accounting for 4.5% of income, an increase of 0.2% over the same period last year. During the period, the bank's loan interest and other operating costs were HK $26.07 million and capital funds were HK $18.82 million, so the financing cost was HK $7.24 million. In addition, the income from the increase in the fair value of investment property in the current period is HK $90 million. The underlying profit of the company's shares was HK $321 million, up 7.5% from the same period last year.

Compared with our forecast, the annual income growth rate in the first half of the collection is higher than we expected, reflecting that the new capacity of the center is digested faster than we do. However, the gross profit margin is also falling faster than ours, but the collection said that the income generated by new customers will begin to reflect in the second half of 2019, so we are concerned about the forecast gross profit margin for 2019. In terms of cost, the share of revenue from sales and administrative expenses is slightly higher than our earlier forecast.