In the first half of the year, the company achieved operating income of 2,958 million yuan, an increase of 5.94% over the same period of the previous year, and realized net profit of 312 million yuan, an increase of 9.80% over the same period of the previous year. After deducting non-return net profit of 280 million yuan, an increase of 9.09% over the same period of the previous year. Revenue for the second quarter was 1,863 million yuan, up 13% year on year, and net profit for the second quarter was 272 million yuan, up 74% year on year. Performance was in line with expectations. We believe that the company holds high-quality assets of Hitachi Elevator. Currently, with elevators as the core product, the upstream and downstream industrial chain continues to expand. The arrival of the elevator renewal cycle+the installation of new elevators in old buildings+elimination of backward production capacity in the industry. It is expected that Guangri's net profit will continue to grow in 2020. The estimated net profit is 490 million yuan, corresponding to 14 times PE, and remains highly recommended.
The main reasons why net revenue and profit maintained positive growth were: investment income in the first half of the year was 275 million, up 4% year on year, of which long-term equity investment (mainly from Hitachi China) was 185 million, down 22% from last year; investment income from transactional financial assets was 76.92 million, up 456% year on year. The gross profit margin for the first half of the year was 13.5%, and the net interest rate was 10.6%, the same as last year. Net operating cash inflow was 126 million, a sharp improvement from last year; contract liabilities were 8.1 million, up 21% from last year, which is reflected in full order availability.
The main logic for recommending the elevator industry is that the renewal cycle has arrived, the completion situation is improving, and the direction of old reform has been established. On the one hand, due to the impact of the epidemic, the completed area from January to July 2020 increased negatively by about 10% year-on-year, but I learned that the actual construction situation continued to improve, and the decline was expected to narrow in the second half of the year; on the other hand, the direction of old reform was established. The old reform direction was established. It is also a direction that can effectively expand domestic demand and improve livelihood projects. It will also be one of the main investment themes in 2020. Elevators are one of the main beneficiary industries, and it is expected to open up a growth ceiling and start a new boom cycle.
Maintain a highly recommended rating. The company's business includes elevator assembly manufacturing, sales and engineering services, elevator parts manufacturing and logistics distribution services, covering the entire elevator industry chain. At the same time, it also holds high-quality assets of Hitachi Elevator. Currently, with elevators as the core product, the upstream and downstream industrial chain continues to expand. The arrival of the elevator renewal cycle+the installation of new elevators in old buildings+elimination of backward production capacity in the industry. It is expected that Guangri's net profit will continue to grow in 2020. The estimated net profit is 490 million yuan, corresponding to 14 times PE, and remains highly recommended.
Risk warning: Prices are falling too fast, the growth rate of real estate investment has declined more than expected, and raw material prices have fluctuated