Events:

In the first half of 2020, the company realized total operating income of about 196 million yuan, an increase of 1.99% over the same period last year; net profit of 33.0931 million yuan, an increase of 1.76% over the same period last year; and earnings per share of 0.03 yuan, the same as that of the same period last year.

Main points of investment:

The impact of the epidemic is relatively small, and it is expected that all businesses will gradually resume in the second half of the year. In the first half of 20 years, the company, as a state-owned enterprise in Chengdu, assumed the dual functions of social responsibility and economic benefits under the background of the epidemic. The performance of advertising and education business has declined due to the epidemic, but on the whole, the business operation has basically remained stable.

In terms of educational business, while strictly controlling the epidemic situation, Chengdu Shu de Bo Rui Experimental School organizes teachers and students to carry out online teaching, so that the quality of basic teaching has been effectively guaranteed. However, the suspension of offline training still has a certain impact on the performance of the company's education business. During the reporting period, the company's education business revenue was 56.6172 million yuan and net profit was 14.6097 million yuan, a decline over the same period last year, but we expect that as the epidemic control gradually stabilizes, the company's education business will return to the normal pace of operation.

In terms of small loan business, during the reporting period, Boren small loan helped small and micro enterprises return to work and production through the establishment of an innovative product "anti-epidemic emergency loan". At the same time, it further combed the stock loans, realizing a bumper harvest of both economic and social benefits, with revenue of 24.5905 million yuan during the reporting period, an increase of 3.5929 million yuan over the same period last year, and a net profit of 21.3291 million yuan, an increase of 9.9466 million yuan over the same period last year.

In terms of leasing business, the company's tenant structure is stable and operating conditions continue to improve. In the first half of the year, the building rental rate of 84.3% performed well, and revenue and net profit increased significantly compared with the same period last year.

In the game business, the competition in the industry continues to intensify in the past 20 years, the competitive advantage of the head game is further enhanced, and the operating level of the company's game business is lower than expected, but the overall proportion of the business is small, which has little impact on the overall performance of the company. The company's advertising business was also affected by the epidemic in Wuhan, with a substantial increase in revenue but a decline in net profit in the first half of the year, and it is expected that the business will return to normal as the epidemic is under control.

In addition, the company's extension development is also continuing to advance. The merger and acquisition project of Sichuan Sheng Xue Education Technology is in progress, and the relevant survey and audit evaluation work has been basically completed. in the future, the landing of the project will significantly enhance the company's coordination in the layout of the education industry chain and enhance profitability; in addition, the company's cooperation with Zhongmaitu and Shanghai Rongzheng Libao investment will also further broaden the space for the company's extension development.

Investment rating and profit forecast

We believe that the overall business development of the company has been driven into the fast lane, and the epidemic in the first half of the year has had an impact on the fundamentals of the company, but the extent and time of the impact are limited, and it is expected that the business will gradually return to the normal operating level in the second half of the year. To sum up, we continue to give the company an investment rating of "increasing holdings". Without considering the company's extension mergers and acquisitions, the company's EPS is expected to be 0.07,0.07 and 0.08 yuan per share respectively from 2020 to 2022. Investors are advised to keep paying attention.

Risk hint

The company's business development is not up to expectations, major changes have taken place in the business, the advertising and game industries remain in the doldrums, the bad debt rate of small loan business has increased significantly, and the late external mergers and acquisitions and project landing are uncertain.