Incident: On August 16, the company released its 2024 semi-annual report. 2024H1 achieved operating income of 6.766 billion yuan, +31.10% year-on-year, and achieved net profit attributable to shareholders of listed companies of 1.448 billion yuan, or -27.54% year-on-year. The performance was in line with expectations.

Revenue was +31.10% YoY, and performance was in line with market expectations. 1) 2024H1 achieved operating income of 6.766 billion yuan, +31.10% year over year, mainly market operations, product sales and trade services increased by 0.468 billion yuan, 1.057 billion yuan, and 0.087 billion yuan respectively, with increases of 25.99%, 37.24%, and 30.63%, respectively; realized net profit attributable to shareholders of listed companies was 1.448 billion yuan, -27.54% year on year; after deducting non-recurring profit and loss Net profit of 1.419 billion yuan was -22.86% YoY, and the performance was in line with expectations.

Chinagoods GMV continued to increase year over year, highlighting the advantages of online and offline integration. 1) The average number of visitors to the 2024H1 Yiwu market was 0.2188 million; the average daily number of foreign visitors exceeded 3,600, an increase of more than 80% over the previous year; the number of inbound foreign visitors was about 0.25 million, an increase of about 95% over the previous year. 2) At the same time, it continues to iterate online platform functions. The Chinagoods platform, the official website of the company's Yiwu market, relies on 0.075 million physical store resources in the company's market to meet the needs of both supply and demand in manufacturing, display and trading, warehousing and logistics, financial credit, and market management. In the first half of 2024, ChinagoodsGMV45 billion yuan, a year-on-year increase of 40.6%; the Chinagoods platform added more than 0.4 million registered buyers, with a cumulative total of more than 4.45 million; the net profit of big data companies was 72.7937 million yuan, an increase of 56.89% year-on-year.

The Express Connect digital currency bridge project was officially launched, and the core beneficiary of digital yuan cross-border transactions. 1) The company uses payment as a traffic entry point to form a closed loop of full-link trade and logistics. Express Connect and the Bank of China are jointly promoting the implementation of the digital yuan cross-border application (that is, the digital currency bridge project). The app officially launched on May 30, 2024. The core goal of the digital currency bridge project is to build a digital currency bridge connecting central banks around the world, with the aim of promoting the efficient interconnection of the global financial system. The operation of the digital currency bridge not only brought substantial convenience to market participants, but also provided central banks with valuable practical opportunities and experience accumulation. This will help central banks to have a deeper understanding of the development context and rules of digital currencies, and provide solid data support and theoretical basis for their future financial policy formulation.

2) 2024H1 Express achieved net profit of 27.381 million yuan, compared to -5.7202 million yuan in the same period last year, a significant increase over the previous year.

A breakthrough has been made in the index data asset listing, and the three-year action plan explores the potential of the data. 1) The company and universities completed the index model update and iterated the index platform website to achieve interconnection with the Chinagoods platform; completed the sorting of index data assets to promote the entry of data resources; “Data Elements Empower Digital Trade Facilitation for Small Commodities” was selected as the first batch of 20 “Data Factor X” typical cases by the National Data Administration. 2) Aiming at the goal of building the “Dow Jones Index in the field of small commodity circulation in China”, the company has formulated a three-year action plan for 2024-2026. In 2024, the company will work to improve the index model; entering 2025, the company will further expand the index system, innovate and develop more sub-indices to meet the needs of different levels, and develop more diverse index application products for the government, industry and enterprises; by 2026, the company will strive to promote the internationalization of small commodity classification standards and achieve data asset trading. It became a new business card for the Yiwu market.

AI empowers e-commerce to improve order fulfillment rate, and small business AI users reached 1.7w. The continuous development and popularization of AI technology can help cross-border e-commerce platforms better understand user and market needs, expand business areas, and maximize commercial value.

The Chinagoods platform teamed up with top teams such as Tsinghua, iFLYTEK, and Baidu to build a 100-person AI R&D team to launch 5 self-developed AI products for the characteristics of the Yiwu market, covering functions such as intelligent translation, video generation, product launch, etc., to create an “AI digital human matrix” to achieve 24-hour interactive operation; “AI Intelligent Translator” supports 36 languages for mutual translation to break down language barriers; “AI Smart Product Launch” and “AI Smart Picture Factory” to help merchants handle complex and professional problems; “Small Business AI” helps merchants handle complex and professional problems through intelligent Q&A Capture buyers' needs accurately and improve order fulfillment rates.

The 2024H1ChinaGoods platform has 0.017 million users who have experienced the Small Business AI series in depth, helping market operators achieve digital business upgrades.

Maintain a “buy” rating. We expect the company's 2024/2025/2026 revenue to reach 13.876/16.356/19.033 billion yuan, and net profit to mother of 2.862/3.319/4.082 billion yuan. Considering the company's position as a core beneficiary of RMB internationalization, it is expected to further explore a broad overseas market space under the Belt and Road Initiative; at the same time, with the establishment of the strategic position of data elements, cooperation between the company and People's Data is expected to jointly build a trade data ecosystem and maintain a “buy” rating.

Risk warning: The risk of macroeconomic fluctuations, new business development falls short of expectations, and policy progress falls short of expectations.