Performance review

1H22 performance is in line with our expectations

Haining Picheng announced 1H22 results: income 600 million yuan, down 9.3%; return net profit 180 million yuan, same drop 12.5%; deducting non-return net profit 110 million yuan, same drop 4.5%, in line with our expectations.

From a quarterly point of view, Q1/Q2 revenue is + 17.1% Mobil 31.4% compared with the same period last year, and non-net profit is + 14.2% Mamei 31.2% year on year, respectively.

Trend of development

1. Under the influence of the disturbance of the epidemic situation, the revenue end is under pressure in the first half of the year. In terms of business format: 1) property rental: income 400 million yuan, with a decline of 9.6%, mainly due to the disturbance of the epidemic situation, the company implemented the impact of rent reduction policy; 2) sales of shops and supporting properties: the income of fashion towns and other projects achieved 41.67 million yuan, with a drop of 75.2%. 3) Hotel services: 11.59 million yuan, up 74.1% 4) Health industry: the income reached 17.25 million yuan, with an increase of 71.5%. The company's rehabilitation hospital expanded the "rehabilitation into the family" service, Yihejiayuan added rehabilitation and testing projects, and carried out remote ECG cooperation. 5) Financial leasing: new business for the company, with an income of 27.86 million yuan in the first half of the year.

2. The gross profit margin has increased, and the expense rate is relatively stable. 1H22 also increased its gross profit margin by 5.8ppt to 48.0%, benefiting from an increase in the proportion of income from property leasing business with a higher gross margin in the income structure. From the cost point of view, the overall cost control is relatively stable, and the expense rate during the period is also reduced to 10.0%, of which the sales, management + R & D and financial expense rates are-0.8ppt/+0.8ppt/-0.3ppt to 3.4%, 8.7% and 2.1% respectively compared with the same period last year. In addition, the disposal of non-current assets resulted in a higher non-recurrent profit and loss base in the same period last year, with 1H22 non-recurrent profit and loss falling by 22.9%. Under the combined influence, the net interest rate is reduced by 1.1ppt to 30.8%, and the non-net interest rate is increased by 1.0ppt to 19.0%.

3. Pay attention to the transformation of the main business and the progress of diversified business layout. 1) main business transformation: steady progress in online integration, gradual expansion of the company's e-commerce base, cooperation with online platforms such as Douyin, Kuaishou Technology, Taobao, etc., to build a strictly selected supply chain platform in Picheng, and improve online supporting services. help merchants broaden their channels.

At present, the profit points of online business include product quality certification, logistics warehousing, platform sub-commission, live training generation operation, etc.; 2) multiple business layout: the company plans to strengthen the cultivation of the secondary industry, with large-scale health business as the key training direction, the company's rehabilitation hospitals promote the construction of "health care consortium" demonstration sites. In addition, the company also promotes the preliminary research on the investment of finance, new energy and other projects, and recently participated in the establishment of an equity investment partnership through its wholly-owned subsidiary Haining China Leather City Investment Co., Ltd. plan to layout investment opportunities in science and technology, health care, consumer services and other industries. Pay attention to the follow-up business transformation and business development progress.

Profit forecast and valuation

Keep the earnings forecast unchanged, with the current share price corresponding to 2022 pound, 2023, 23, 22, and E, respectively. Maintain the neutral rating and target price of 4.6 yuan, corresponding to the 2022 pound in 2023, 21 times the price of the 22 pound, which is 4% lower than the current share price.

Risk.

The competition in the industry continues to intensify, the repeated impact of the epidemic exceeds expectations, and the progress of the big health business falls short of expectations.