The company released its 2024 semi-annual report. 24H1 achieved revenue of 1.257 billion yuan/yoy +9.6%, achieved net profit of 0.053 billion yuan/yoy +9.8%, net profit of 0.052 billion yuan/yoy +12.4%; single 24Q2 achieved revenue of 0.656 billion yuan/yoy +9.6%, achieving net profit due to mother 0.033 billion yuan/yoy +9.2%, net profit of non-return to mother 0.033 billion yuan/yoy billion yuan/yoy +12.1%

By business, 1) 24H1 information security service achieved revenue of 0.89 billion yuan/yoy +3.7%, gross margin of 29.20% /yoy+1.7pp, and a steady increase in the number of outlets covered by the company's escort services. As of June 30, 2024, the number of service bank outlets in the province was 10,581, accounting for 81% of the number of outlets in the province.

2) Security services achieved revenue of 0.275 billion yuan/yoy +20.6%, and gross margin of 8.76% /yoy-1.5pp.

3) Safety and emergency services achieved revenue of 0.079 billion yuan/yoy +92.7%, and gross margin of 19.27% /yoy-37.1pp.

The company is a leading domestic financial security service. The financial escort business covers 81% of outlets in the province, and the business is steadily building a solid margin of safety. Due to regional restrictions on security service operations, the market previously had some concerns about the company's growth. During the reporting period, the company reached a memorandum of strategic cooperation with China Banknote Great Wall Company. Subsidiaries such as Jiaxing Anbang, Taizhou Anbang, and Quzhou Anbang are actively promoting regional cash center pilot projects. If regional cash centers are promoted to the whole of Zhejiang Province, it is expected that the company's profit limit will be further raised.

Profit forecast and investment advice: Optimistic about the company's resource integration and business operation capabilities as a leader in the financial security industry. The company is expected to achieve revenue of 2.776/3.028/3.301 billion yuan in 2024-2026, yoy +11.7%/+9.1%/+9.0%, and achieve net profit of 0.124/0.142/0.158 billion yuan, yoy +5.2%/+14.4%/+11.1%. The current stock price corresponds to 24-26 PE 22/19/, respectively 17X, giving it a “Recommended” rating.

Risk warning: risk of shrinking customer escort demand; risk of business expansion falling short of expectations across provinces; risk of rising labor costs.