2019 results meet our expectations Aijian Group announced 2019 results: total revenue +43% yoy to 3.8 billion yuan, net profit +14% to 1.3 billion yuan yoy, basically in line with our expectations; RoAE in the reporting period was -0.95ppt to 13% year over year; of these, 4Q19 revenue was +22% /+23% yoy to 1 billion yuan, and net profit of net income -13% /-24% yoy to 300 million yuan, mainly due to a significant increase in operating costs and sales expenses (of which financial leasing costs +194% compared to operating expenses, +19194%, (Commercial operating costs +53% YoY, sales expenses +485% YoY). Development trend The trust business is growing steadily, continuously improving active management capabilities. Aijian Trust's 2019 revenue was +23% to 2.1 billion yuan, with a revenue contribution of 55%; net profit of +13% was +13% to 1.25 billion yuan, and profit contribution was 95%. In addition, Aijian Trust actively implements the “asset and wealth” two-wheel drive strategy and actively explores innovation and transformation; at the same time, it continues to go to channels and continuously strengthen its active management capabilities, and the return rate of trusts has increased. The leasing business increased significantly, and Huarui Leasing contributed to the increase in performance. Aijian Leasing's 2019 revenue was +43% year over year to 400 million yuan, and net profit was -6.8% year on year to 79.57 million yuan. Mainly due to the marked increase in operating costs of the financial leasing business, the size of interest-bearing assets reached 3.234 billion yuan. Meanwhile, Aijian Leasing continues to strengthen five major sectors, including utilities, education, healthcare, logistics, and urban upgrading services, to achieve an increase in business investment. Huarui Leasing (mainly aircraft and backup engine leases) achieved net profit of 110 million yuan in 2019 and interest-bearing assets of 5.6 billion yuan. Meanwhile, Huarui Leasing continues to expand and strengthen its aircraft leasing business. It has obtained ODI for business innovation and established a leasing platform and leasing SPV in Hong Kong. The continued increase in majority shareholders' holdings shows confidence, and the financial sector is diversified. As of April 1, 2020, Junyao Group, the majority shareholder of the company, held a total of 29% of the company's total share capital, and plans to increase its holdings by a minimum of no less than 0.1% and a maximum of no more than 0.5% of the company's shares within 6 months from March 20, 2020. In addition, in terms of diversified financial layout: 1) the company actively adjusted its Aijian Assets and Aijian industrial management teams and implemented direct management, further clarifying Aijian Hong Kong's strategic position, Aijian Capital focused on promoting aviation industry funds; 2) In terms of wealth management, Aijian Wealth changed its name to Aijian Fund sales, implemented differentiated and complementary development with Aijian Trust's direct sales team, and achieved net profit of 530,000 yuan in 2019. Furthermore, the company's investment income in 2019 was +71% year over year to 900 million yuan (of which trust product income was +25% year on year to 570 million yuan, contributing 64% of investment income). Profit forecasts and valuations. Taking into account the trend of trust business disconnection and scale reduction under strict supervision and the potential impact of the pandemic on the company's business development, we reduced 2020 profit by 17% to 1.4 billion yuan and introduced a profit of 1.5 billion yuan in 2021. The company is currently trading at 1.1 x 2020e P/B, maintaining an outperforming industry rating and lowering the target price by 18% to 9.8 yuan, corresponding to 1.4x 2020e P/B and 11.3x2020e P/E, with 22% room to rise from the current stock price. Venture trust and leasing business growth and asset quality fell short of expectations; regulatory uncertainty.