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Benefiting from the industrial background and its own advantages, the company's performance has reached an all-time high for three consecutive years. The company's business, including personal difficulties, institutional difficulties and high-quality asset management, competes with other asset management companies, and its performance has achieved rapid growth in recent years. In the first half of 2023, the company achieved operating income of 551 million yuan, an increase of 14.75% over the same period last year, and a net profit of 515 million yuan, an increase of 59.45% over the same period last year. At present, China's economic reform and development has entered the stage of transformation and upgrading of industrial structure, and investment opportunities for distressed assets have increased significantly. As of 2023Q1, the balance of non-performing loans of China's commercial banks is about 3.1 trillion yuan; the scale of non-performing assets of non-bank financial institutions is about 2.64 trillion yuan; for non-financial enterprises, it is conservatively estimated that the scale of non-performing assets is about 1 trillion yuan. Considering the distressed enterprises that are in financial distress but have not yet reached the standard of non-performing assets, as well as the undisposed distressed assets held by AMC, the stock of non-performing assets in China is expected to reach 10 trillion yuan.

Vigorously develop individual loan non-performing assets business, is expected to become a major performance growth point in the future. In July 2021, Hyde Capital Management was approved to carry out the business of purchasing and disposing of individual loan non-performing assets 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". As a licensed AMC, Hyde Capital Management, which gives full play to its license advantages, has cooperated with the Great Wall Equity Fund, Shandong Aviation Investment Fund and other professional institutions to set up individual loan non-performing funds, and the follow-up company will continue to give full play to its own advantages and actively cooperate with market professional institutions to jointly invest in individual loan bad business.

Relying on the industrial background of the group, the layout of the energy storage industry. The company and Yongtai Energy jointly invested in the establishment of energy storage technology company Detai energy storage, focusing on investment in the field of all-vanadium flow energy storage, which has initially realized the layout of the whole industry chain. On June 27, Detai Energy Storage Zhangjiagang held the opening ceremony of 1000MW all-vanadium flow energy storage equipment manufacturing base and Detai Energy Storage Research Institute. The first phase of the production line is expected to be put into production in the second half of 2024.

Investment suggestion: we expect the company's operating income from 2023 to 2025 to be 13.74 million yuan 17.79 / 2.304 billion yuan respectively, and the net profit to return to the mother is 9.82 billion yuan, respectively. The net profit from the parent is 1.682 billion yuan, corresponding to the EPS of 0.73 Placement 1.25 yuan, and corresponding to PE16.41/12.64/9.58X, the first coverage will be given a "buy" rating.

Risk hints: tighter supervision, increased competition in the industry, profit forecasts and valuations are lower than expected