Incident: The company announced its 2022 annual report & 23Q1 quarterly report. 22FY's revenue was 1.22 billion yuan/-0.3% year on year, net profit of 830,000 million/-17% year on year, of which Q4's single-quarter revenue was 330 million/-13% year on year, and Guimo's net profit was 0.6 million/-82% year on year. 23Q1 revenue was 230 million/-18% year on year, net profit of 210 million/-20% year on year, net profit of the mother after deduction was 210 million/+227% year on year.

Private equity management business: Carry has not yet been calculated due to accounting prudence. Under a low base, Carry is optimistic about the release of managed fund withdrawal returns plus new fund management fees to contribute to profit growth.

1) Carry/Performance Remuneration: The unaccrued performance reward in '22 was about 820 million yuan, which is expected to be gradually released in the future.

The company first disclosed the estimated size of Carry's revenue in its financial report. According to the fair value of the Harmonious Jinhong and Harmonious Jinyu portfolios at the end of '22, the company expects performance compensation of about 82 billion yuan, but due to accounting prudence, accounting has not yet begun (if all Carry is calculated in '22, the corresponding net profit attributable to the mother is 1.65 billion dollars/+66% year on year). Looking ahead to 23, with the gradual withdrawal of projects such as Aojie Technology and the listing of projects such as Greywatt and Honeycomb Energy, it can be estimated that Carry will continue to grow and be gradually released.

2) Management fees: The implementation of new funds continues to advance, and management fees are expected to reach a new level. Private equity investment business revenue in '22 was 270 million yuan, -7% year on year. We determine that the main reason was the decline in the actual management scale after the management fund entered the exit period; as the implementation of the “Harmonious Green Industry Fund” accelerated (as of 4/28, the total amount pledged had reached 4.65 billion yuan, the target of 7.5 billion yuan), management fee revenue is expected to grow steadily (calculated based on a management fee rate of 2% /subscription size of 7.5 billion yuan, or 150 million yuan/year).

3) Follow-up investment income: Funds under management have entered an exit period, and investment income is released at an accelerated pace. In '22, the company achieved investment income of 900 million yuan, +157% over the same period last year, mainly as a contribution to the funds under management. Among them, Harmony Jinhong contributed 440 million yuan, and Harmony Jinyu contributed 220 million yuan. The remaining consolidated profit of about 220 million yuan came mainly from investment income from direct investment projects such as smart settlement accounts.

4) Third-party fund investment withdrawals are dragging down performance, and a low base is expected to highlight profit growth. The company's fair value recorded a loss of 300 million yuan in '22, a sharp drop from 350 million in the same period last year. The main reason was that the profit and loss of third-party fund assets invested by the company was included in the profit and loss of changes in fair value, such as the smart travel fund's loss of 300 million yuan. We judge that with the release of risk, investment income from third-party funds is expected to rise steadily, and the low base is expected to highlight the company's profit growth.

The building materials business is growing steadily and is expected to continue to contribute stable profits. The company's building materials business revenue in '22 was 950 million yuan, +2% over the same period, accounting for 78% of revenue during the same period; its subsidiary Yibin Cement made a net profit of 180 million yuan, accounting for 21% of the net profit of its mother during the same period. Looking ahead, with economic recovery and infrastructure development in Sichuan, the company's building materials business is expected to continue to contribute stable profits. (The company expects cement sales to remain the same year on year in '23, and aggregate sales will increase by +3.4%)

The Q1 performance was in line with expectations. The increase in profit after deduction was mainly due to a low base. The company achieved the withdrawal of the direct investment project Smart Settlement in March of last year. A one-time exit income of 190 million yuan was calculated at the end of 22Q1, including non-recurring profit and loss. Combined with the smart travel fund's fair value loss of about 180 million yuan for the quarter, the result was a profit of only 0.6 billion yuan after deducting 22Q1, which achieved a high performance increase under a low base.

Profit Forecast & Investment Suggestions: The company's managed funds and direct investment projects have entered the harvest period one after another, and investment income and performance rewards are expected to be further released. At the same time, when combined with the increase in management fee revenue brought about by new funds and the low base brought about by the withdrawal of investment from third party funds, profit growth in '23 is expected to be highlighted. The company's net profit is expected to return to the mother in 23-25 to 15.8, 17.7 billion yuan, and 2.04 billion yuan, maintaining the “buy” rating.

Risk warning: The listing process of investment projects fell short of expectations; the capital market fluctuated greatly; the process of raising new funds fell short of expectations