Event: according to the semi-annual report released by the company, 23H1 realized operating income of 5.66 billion yuan, down 18.6% from the same period last year; realized net profit of 150 million yuan, down 85.3% from the same period last year; realized net profit of 2.7%, reduced by 12.1 pct; deducted 90 million yuan of non-return net profit, down 90.4% from the same period last year, deducted 1.6% of non-return net interest rate, and reduced 11.9pct. In a single quarter, 23Q2 realized operating income of 3.04 billion yuan, down 15.0% from the same period last year; realized net profit of 5 million yuan, down 98.5% from the same period last year; realized net profit of 0.2%, or 9.0%; and deducted non-return net profit of-130 million yuan, down-127.4% from the same period last year; deducted non-return net interest rate of-4.1%, and reduced 17.0pct.
23H1's comprehensive gross profit margin is 59.7%, which is the same as minus 2.6pct. The expense rate during the period is 45.2%, with an increase of 10.6pct. Among them, the sales / management / R & D / financial expense rates are 10.7%, 11.9%, 0.2%, 22.5%, respectively, with year-on-year changes + 2.1pct/+3.1pct/-0.2pct/+5.6pct. The comprehensive gross profit margin of 23Q2 is 59.6%, which is the same as minus 3.6pct. The expense rate during the period is 48.5%, with an increase of 15.2pct. Among them, the sales / management / R & D / financial expense rate is 11.5% 12.5%, 0.1% and 24.5%, respectively, and the year-on-year change + 2.5pct/+5.3pct/-0.2pct/+7.6pct.
In terms of products, in self-operated shopping malls, rental and related income was 3.377 billion yuan, down 18.7% from the same period last year, accounting for 59.7% of operating income. The change is mainly due to the impact of macroeconomic fluctuations on shopping malls and the introduction of rent-free policy in the second half of 2022, which reduced the revenue of self-operated shopping malls compared with the same period last year. The revenue of commission and management business was 1.077 billion yuan, down 16.9% from the same period last year, mainly due to the reduction of brand consulting entrusted management in the early stage of the project, annual brand consulting entrusted management and business consulting fees and investment promotion commission project income. The total income from construction and design was 532 million yuan, a decrease of 27.2%. Revenue from home improvement-related services and commodities totaled 221 million yuan, down 12.1%.
From a separate channel point of view, 23H1 closed 2 self-operated shopping malls and 7 commissioned shopping malls; 5 newly opened commission-managed shopping malls, located in Xingtai, Hebei, Taizhou, Jiangsu, Lianyungang, Jiangsu, Yan'an, Shaanxi, and Zhuhai, Guangdong; and 2 shopping malls changed from commission to franchise. As of June 30, 2023, the company has operated 91 self-operated shopping malls, 281 supervised shopping malls, and 8 household shopping malls through strategic cooperation. in addition, the company has authorized 54 franchised home building materials projects by way of franchise. a total of 465 household building materials stores / industrial streets. Through the commission and franchise model, the company expands the shopping mall network in the third-tier and below cities to quickly infiltrate the sinking market.
Shareholder structure optimization, business coordination ushered in a new opportunity for development. The company introduced new shareholders Jianfa shares and United Development Group in June 2023, with a shareholding ratio of 23.95% and 6.00% respectively. Jianfa shares is a local state-owned enterprise in Xiamen and is a senior supply chain operator in the industry. Jianfa shares and the company have strong cooperation in the supply chain and real estate business, and are expected to empower the company in financial resources. In the future, the two sides are expected to continue to empower each other and achieve each other, and the company will usher in new development opportunities.
Profit forecast and rating: taking into account the impact of the macro-economy and the company's rent-free policy, we reduced the company's 24-year net profit from 2.253 billion yuan to 624 / 788 million yuan, a year-on-year change of-16.67%, 26.23%. The current stock price corresponds to 31.1 and 24.7 times of PE for 23 and 24 years, and 0.35,0.35 times PB for 24 years. Refer to comparable company to give 23 years 36-38 times PE valuation, corresponding to reasonable value range of 5.16-5.44 yuan, corresponding to PB is 0.41-0.43 times, given "better than the big city" rating.
Risk hint: competition in the industry intensifies, home decoration orders grow less than expected, and the speed of store development is not as fast as expected.