Incident: The company achieved revenue of 6.766 billion yuan in 2024H1, +31.10% year-on-year, and realized net profit to mother of 1.448 billion yuan, or -27.54% year-on-year. 2024Q2 achieved revenue of 4.085 billion yuan, +34.36% year over year, and net profit to mother of 0.735 billion yuan, -5.31% year over year.

Market operations are growing rapidly, and new businesses are progressing smoothly. 1) The market operation business 2024H1 revenue was 2.269 billion yuan, +25.99% over the same period. The business is in the phase of volume and price increase. The increase mainly comes from the opening of the East 3rd Floor Market in District 2 and rent increases in the old market. The construction of the digital trade center is progressing steadily, and the main players in the second phase of the project market have peaked; 2) the 2024H1 sales business generated 3.895 billion yuan, +37.27%, and the company successfully obtained the used car export qualification; 3) The 2024H1 trade service business earned 0.371 billion yuan, +30.63% year-on-year, including 45 GMV45 billion yuan in the CG platform, +40.6% year-on-year. In the first half of the year, the platform added 45 third-party digital service products, with a total of 194 being launched. It covers the fields of content construction, trade services, warehousing and logistics, operation support, marketing, enterprise management, etc., and launched 5 self-developed AI products with teams such as Tsinghua, iFLYZ, and Baidu. The payment business transaction volume exceeded 12 billion yuan, 1 billion yuan in the same period last year, and the number of supported currencies increased from 20 to 25 in the same period last year.

The decline in profit was mainly due to the impact of investment income and asset disposal income, and the main business profit increased sharply. The decline in the company's net profit in the first half of the year was mainly due to a decrease of 1.051 billion yuan in investment income and asset disposal income. After excluding investment income and asset disposal income, the company's main business profit was 1.35 billion yuan, +65.85% year-on-year, and net profit from market operations and trade services increased by 0.501 billion yuan. Among them, the net profit of the big data company was 72.7937 million yuan, +56.89% over the same period last year, mainly driven by the CG platform's deep service business, which paid the company's net profit of 27.381 million yuan, compared to -5.7202 million yuan in the same period last year.

Investment suggestions: Improve the quality of the company's profits, revitalize and explore old markets, expand new markets, and implement new trade contracts to jointly drive subsequent growth, and the transformation logic continues to be implemented. We expect 2024-2026 net profit of 2.75/2.83/3.95 billion yuan, corresponding to PE14.6/14.2/10.2X, to maintain the “gain” rating.

Risk warning: Chinagoods platform development falls short of expectations; payment business progress falls short of expectations; new business-related talent reserves fall short of expectations; Yiwu market policy advantages reduce risk.