Event: according to the company's semi-annual report for 2023, 2023H1 achieved revenue of 551 million yuan, + 14.75% year-on-year; net profit of 515 million yuan, + 59.45% year-on-year; and weighted average ROE 9.52%, up 2.91pct over the same period last year.

Comments:

Science and technology individual loan non-performing assets management business: in July 2021, Hyde Capital Management was approved to develop the qualification of individual loan non-performing assets acquisition and disposal business nationwide, and in August 2022, through the merger and acquisition of Junfeng Technology, it began to use "big data + AI technology" to carry out individual loan non-performing assets management business, forming a full-chain, professional, batch and intelligent individual loan non-performing assets management capability of "asset acquisition + back-end disposal". The company actively declared and carried out the access to the credit information system. In June 2023, with the approval of the Credit Information Center of the people's Bank of China, Hyde Capital Management received a reply to carry out the work of accessing the basic database of financial credit information. In the first half of 2023, the entrusted asset management business of the company's science and technology personal loan non-performing asset management business realized 56.4656 million yuan in service fee income. The company expects to achieve the goal of accumulating assets under management of not less than 100 billion yuan in one year and not less than 400 billion yuan in the next three years. We believe that with the expansion of the non-performing loan industry, C-end non-performing loan business is expected to become a new growth pole of the company through AI technology.

Institutional distress asset management business: 1) Energy field: relying on the resource endowment of the group's energy industry, the company focuses on selecting energy enterprises or their shareholders that are in trouble due to financial, operational and other reasons, and intervenes in the way of reorganization. Through a package of financial or operational assistance, after helping distressed enterprises resolve risks, improve quality and increase efficiency, they gradually withdraw. By the end of the second quarter of 2023, the company's energy distressed assets project balance of 4.97 billion yuan, according to the restructuring agreement can bring long-term and stable restructuring income for the company. 2) Commercial real estate field: the company mainly locates the distressed commercial real estate projects in Beijing, Yangtze River Delta, Pearl River Delta, Chengdu and Chongqing and other economically developed regions to obtain stable rental income and asset appreciation income, as of the end of the second quarter, the company's commercial real estate distressed assets project stock balance of 1.123 billion yuan. 3) the field of listed companies: the company mainly aims at the business of listed companies whose main business is good but in trouble, through professional restructuring operation to help resolve risks, improve quality and efficiency, and obtain value and income. In November 2022, the company acquired 11.96% of Helen Zhe through legal auction, becoming the largest shareholder of Helen Zhe. With the joint efforts of all parties, various businesses of Helen Zhe have been back on the right track since 2023, and the risk of delisting has been resolved.

Through the Helen Zhe project, the company has further enriched the experience of relief and quality improvement of listed companies in difficulties, and companies have gained first-mover advantages in the areas of listed business in difficulties. By the end of the second quarter, the balance of the distressed assets project of the company's listed companies is 708 million yuan. 4) Special opportunity areas: mainly select distressed assets with low discount rate, but individual claims have property clues and high value, and can achieve repayment in a short period of time, or high-quality asset packages with relatively rare cases of batch external transfer in the same type on the market. At present, it has established business contacts and cooperative relations with a number of financial institutions, local AMC and unlicensed asset management companies, and carried out all-round and in-depth cooperation in the aspects of non-performing assets project selection, package, acquisition and disposal. By the end of the second quarter, the company's special opportunity project balance was 794 million yuan. We believe that, relying on the industrial advantages of controlling shareholders, restructuring management experience and scarce license qualifications of listed companies, the B-end business of the company is expected to achieve stable scale growth.

Quality asset management business: by giving full play to the advantages of shareholders, the company's Detai Energy Storage has comprehensively built an energy storage industry dominated by all-vanadium flow batteries. The first phase of the 300MW/ annual all-vanadium flow battery production line (including system integration) of Detai Energy Storage equipment in Zhangjiagang, Zhangjiagang, is expected to be put into production in the second half of 2024. The first phase of the 3000 t / a high purity vanadium pentoxide separation and metallurgy production line of Dunhuang Huihong Mining Development Co., Ltd., to which Detai Energy Storage belongs, is expected to be put into production in the second half of 2024.

Profit forecast and investment advice: we expect the homing net profit for 2023-2025e to be 1.037 PE 1.484 billion, corresponding to 2023-2025E for 17.0x/15.9x/11.9x, maintaining the "buy" rating.

Risk factors: the development of non-performing individual loan business is not as expected, the expansion of distressed asset management business is not as expected, market competition is intensified, and so on.