Profit in line with forecasts maintained relatively rapid growth. Maintaining the “buy” rating, Guolian Co., Ltd. achieved revenue of 23.633 billion yuan, a total increase of 48.05% in 23H1; net profit of 643 million yuan, an increase of 50.50%; deducting non-net profit of 567 million yuan, an increase of 47.23%, all in line with the range of previous performance forecasts. The company continues to implement the industrial Internet development strategy with “platform, technology and data” as the core, and the core industrial e-commerce platform continues to replicate horizontally and deepen vertically. We maintain our performance forecast for 2023-25, and expect the company to achieve net profit of 17.36/26.44/3.850 billion yuan. Based on the company's own historical valuation level and future profit growth expectations, we gave the company PE 16X for 23 years. The average PE value for the company's three-year history was reduced by 1.3x standard deviation. The main reason for the valuation discount was to consider that the company's profit growth rate had slowed down compared to history. The corresponding target price was 38.40 yuan, and “buying” was maintained.
B2B vertical e-commerce platforms help grow performance and deepen into digital supply chains and industrial Internet services. 23H1 is actively promoting multi-platform transaction scale growth and platform ecosystem expansion, including Tuduoduo, Wei Duoduo, Boduoduo, Fat Duoduo, Fat Duoduo, More Paper, More Grain and Oil, More Core, and More Medical Equipment. The platform's horizontal replication and deep vertical cultivation have continued to increase, and the overall scale of online commodity trading business and revenue contribution have continued to increase.
23H1's coating/hygiene products/glass/paper/fertiliser/grain and oil/other industries accounted for 53.4%/18.8%/4.6%/1.4%/7.9%/11.9%/2.1%, respectively. Among them, the total share of the top three industries (coatings, hygiene products, grain and oil) fell 2.9 pct to 84.0% from 86.9% in '22. At the same time, the company is accelerating the deployment of digital transformation services for platform client enterprises and industries, promoting digital supply chain services including smart logistics and digital warehouses, and exploring richer commercial monetization methods and broader growth space.
Gross margin was optimized month-on-month, and R&D investment increased year-on-year
23H1's gross sales margin decreased slightly by 0.3 pct to 5.0% compared to 22H1. Of these, 23Q2's gross profit margin was 6.09%, up 2.03pct from Q1. The company expanded R&D investment, promoted the construction of an industrial Internet platform, and kept a close eye on the direction of new technology. 23 In the first half of the year, R&D expenses increased 66.28% year-on-year to 71.73 million yuan. The R&D cost rate reached 0.30%, an increase of 0.03 pct over the previous year. The sales and management expenses ratio decreased by 0.23/0.06pct to 0.51%/0.22%, respectively. Overall, 23H1's net return interest rate increased slightly by 0.04 pct to 2.72% year on year, of which Q2 increased 1.75 pct to 3.70% over Q1.
The buyback plan continues to be implemented, and “buy-ins” are maintained
The company announced on August 23 that the implementation status of the “Proposal on the Company's Plan to Repurchase Company Shares through Centralized Bidding Transactions” (the total repurchase amount is not less than 200 million yuan and not more than 400 million yuan) was previously reviewed and passed. As of August 23, the company had repurchased 1,593,400 shares, with a repurchase payment amount of about 130 million yuan. The repurchase plan is progressing steadily. We maintain our profit forecast. We expect to achieve net profit of 17.36/26.44/3.850 billion yuan in 23-25, giving the company PE 16X for 23 years, corresponding to a target price of 38.40 yuan (previous value of 69.60 yuan; average PE value for three years in history minus 1.8x standard deviation), maintaining “buying”.
Risk warning: vertical platform expansion falls short of expectations, customer conversion falls short of expectations, risks related to the epidemic, etc.