1H2019's operating income increased by 3.28% compared with the same period last year, while its net profit decreased by 6.40% year-on-year.

1H2019 achieved an operating income of 4.672 billion yuan, an increase of 3.28% over the same period last year, a net profit of 204 million yuan, a decrease of 6.40% over the same period last year, and a non-return net profit of 133 million yuan, a decrease of 35.42% over the same period last year.

In a single quarter, 2Q2019 achieved an operating income of 2.4 billion yuan, an increase of 16.13% over the same period last year, a net profit of 75 million yuan, a decrease of 20.56%, and a non-return net profit of 34 million yuan, a decrease of 59.46% over the same period last year.

The comprehensive gross profit margin decreased by 1.49 percentage points, and the expense rate increased by 0.60 percentage points during the period.

1H2019's consolidated gross profit margin was 13.41%, down 1.49% from the same period last year. Gross profit margin decreased during the reporting period, mainly due to the decline in gross profit margin caused by price reduction promotion in the automobile business.

The expense rate of 1H2019 during the period was 9.30%, an increase of 0.60% over the same period last year, of which the sales / management / financial expense rate was 3.89%, 5.12%, 0.28%, respectively, and changed by-0.07 / 0.71, respectively, 0.04% over the same period last year.

Auto business income has recovered, pay attention to the growth of 7-11 in Hubei Province.

The revenue side of the company's automobile business recovered during the reporting period, mainly due to the large-scale promotion activities carried out by joint dealers in May and June to solve the inventory problem of the "National five-year Plan", resulting in an increase in sales. The company has been granted the 7-11 franchise in Hubei since July 18, and opened 6 stores in Wuhan by the end of the reporting period. with the increase in the number of exhibition stores, convenience store business may become a new performance growth point of the company.

Slightly raise the profit forecast and maintain the "overweight" rating

The revenue side of the company has recovered, and the expense side is in an overall controllable situation. Based on the company's latest equity of 885 million, we slightly raised the fully diluted EPS of the company for 19-21 to 0.32 / 0.34 pm 0.37 yuan (previously 0.31 / 0.33 / 0.36 yuan). The company's PE (2019E) is 11x, below the average of the past three years (16x), and maintains an "overweight" rating.

Risk Tips:

The auto business was lower than expected, and the performance of mid-and high-end department stores was lower than expected.