Event: Recently, Aijian Group released its 2019 semi-annual report, achieving total operating income of 1,951 billion yuan, an increase of 58.02% over the previous year; net profit of 630 million yuan, an increase of 16.69% over the previous year; and basic earnings per share of 0.39 yuan. Key investment points: Trust business is improving, and supporting performance is in line with expectations. 2019 H1 Aijian Trust achieved total operating income of 1,096 million yuan, an increase of 13.64% over the previous year; net profit of the mother was 585 million yuan, an increase of 2.86% over the previous year. 1) Trust business is steady, and litigation incidents have dragged down. Considering that the macroeconomic downward pressure in the first half of the year caused pressure on the asset side of the industry, combined with the regulatory policy represented by “Document No. 23,” which emphasized strict control of real estate trusts, the double-digit revenue growth rate of Aijian Trust was relatively impressive. However, the company's weak net profit performance was mainly due to Fangda Carbon's lawsuit against Aijian Trust and other undertaker shareholders for inadequate funding, which led to non-operating expenses of 161 million yuan. Excluding this factor, Aijian Trust's net profit growth rate was 30.90%, and continued to grow steadily. 2) Trust remuneration rates are expected to increase with the industry. According to data disclosed by the Trust Industry Association, the average annualized comprehensive trust remuneration rate of the trust industry in 2019Q1 was 0.43%, a slight increase over the previous year. It is determined that this is due to the increase in premiums driven by the transformation of active management. In the past two years, the company has followed active management transformation in line with industry trends. After the implementation of new asset management regulations, the company has vigorously cleaned up channels and multi-level nested businesses. It is expected that the trust return rate will increase steadily. 3) Continue to promote business innovation. On the one hand, 2019H1 carried out supply chain finance-related business in an orderly manner and completed the implementation of various projects; on the other hand, it continued to promote other technical cooperation with large platform companies in consumer finance, and the business structure was continuously optimized. The leasing business performed well and strengthened the utility business. 2019 H1 Aijian Leasing achieved total operating income of 200 million yuan, an increase of 45.97% over the previous year; realized net profit of 50 million yuan, an increase of 7.30% over the previous year; in addition, the interest-bearing asset balance was 5.163 billion yuan, an increase of 45.00% over the previous year. After the company transferred 100% of Huarui's shares in Huarui Leasing, a subsidiary of the majority shareholder Junyao Group, in September 2018, the company completed leasing fields such as aviation and backup engines, and initially completed the integration of leasing resources with the majority shareholders, and the business structure was improving day by day. 2019 H1 Huarui Leasing achieved net profit of 51 million yuan and interest-bearing assets of over 5 billion yuan, effectively increasing the contribution of the leasing business to the Group's profit. Furthermore, in the first half of the year, Aijian Leasing further strengthened its utility business, increased its investment in the medical and education sectors, and actively explored innovative business models such as logistics, urban service upgrades, and energy and environmental protection. The majority shareholders continued to increase their holdings and lay out a comprehensive financial service system: In 2015-2018, after the newly appointed majority shareholder Junyao Group joined, the average annual compound growth rates of the company's total operating income and net profit were 24.37% and 22.61% respectively, significantly higher than the previous growth rate. The impact of the private management mechanism and group business resources brought about by this in promoting the company's operations can be seen. The Yao Group has also maintained a high level of strategic attention to the company and has frequently increased its holdings in the secondary market. According to the latest announcement, Junyao Group's shareholding ratio in the company has increased from 22.08% initially to 28.84% at the end of August 2019. While consolidating its holding position, it also shows confidence in the company's long-term operations. With the majority shareholders' industrial resources in aviation, consumption, education, science and innovation, etc., the company comprehensively promotes the integrated development strategy of industry and finance, leverages the multi-level financial functions of various subsidiaries such as Aijian Trust, Aijian Leasing, Aijian Securities, Aijian Wealth, and Aijian Assets, and develops a comprehensive financial service system. Investment recommendations and profit forecasts: Under the influence of multiple adverse factors such as pressure on the asset side, active transformation pain, and strict supervision of real estate trusts, the company's core trust business continues to improve, showing long-term business resilience. At the same time, various diversified financial businesses, represented by leasing, showed clear signs of marginal improvement with the resource support of major shareholders. Optimistic about the company's potential to transform into a comprehensive financial services platform, it is expected that operational efficiency and profit levels will continue to improve. We forecast that the company's net profit for 2019/2020/2021 will be 1,498/16.22/1,708 billion yuan, up 29.35%/8.30%/5.27% year-on-year respectively. The current stock price corresponding to PB is 1.28/1.14/1.02 times, and still maintains the “increased holdings” rating. Risk warning: The trend of macroeconomic stabilization has changed; financial regulation has exceeded expectations; the growth rate of social finance and trust loans has fallen short of expectations; the progress of the company's active management transformation has fallen short of expectations; and the quality of leased assets has declined.