In the first half of the year, revenue increased 59%, and net profit to mother increased by 82%, which is in the middle of the forecast range. 2024H1's revenue was 1.18 billion yuan/ +58.1%, and net profit to mother was 0.55 billion yuan/ +81.7%, which is in the middle of the forecast range. 2024Q1 revenue 0.56 billion yuan/ +138.7%, net profit due to mother 0.25 billion yuan/ +317.3%.

2024Q2 revenue 0.62 billion yuan/ +22.1%, net profit to mother 0.3 billion yuan/ +23.2%. The number of operating days of stock projects in the first quarter returned to normal on a low base, and both revenue and profit doubled; the performance differentiation of stock projects in the second quarter was under pressure, but the development period of new projects showed outstanding performance, and overall performance was in line with expectations.

The new projects in Foshan and Xi'an were all profitable in the first half of the year. The traditional stock market project was stable overall, but performance was differentiated by the consumption environment and regional factors, and the asset-light Three Gorges project is expected to contribute a one-time increase. In the first half of the year, the revenue of the nine major self-operated projects was 0.87 billion yuan/ +52.5%, and net profit was 0.34 billion yuan. Among them, growth was relatively rapid under the low base in Q1, the recovery of some projects was slightly divided, and the contribution of new projects increased significantly in Q2. Let's take a closer look:

1) The new project performed well, contributing about 0.11 billion yuan to the net profit increase of the mother in the first half of the year. The net profit of the Foshan project in the first half of the year was 0.05 billion yuan, and the performance in the first business year exceeded expectations. The net profit of the Xi'an project was 0.02 billion yuan. Profits were already profitable in the first quarter, and the loss was reversed for the first time in the first half of the year. The loss was nearly 0.01 billion yuan in the same period last year; the opening of Theatre No. 2 on July 6 further opened up the peak season reception bottleneck, and the summer concert venue ranked first among all projects. The Shanghai project lost 0.02 billion yuan to the mother, a year-on-year loss of 0.03 billion yuan.

2) The traditional stock market is generally stable and partially under pressure. The net profit of the Hangzhou project in the first half of the year was 0.13 billion yuan/ +36%, an increase of 0.03 billion yuan over the previous year. The Q1 base is low, Q2 is expected to remain flat and slightly increase, and the East China Group is gradually recovering. The net profit of the Sanya project was 0.06 billion yuan/ +4%, which was stable year on year, but less than one-half of 2019, and the impact of secondary transfers from Southeast Asia continued; the net profit of the Guilin project was 0.02 billion yuan/ +2%, exceeding the 2019 level; Jiuzhai's revenue was relatively stable year over year, with net profit of 0.005 billion yuan to mother. The Lijiang project is under pressure, with net profit of 0.07 billion yuan/ -15%, which is expected to be mainly affected by the short-term increase in comprehensive regulation of the cultural tourism market; the Zhangjiajie project lost 0.007 billion yuan, and competition for performing arts intensified.

3) In addition, the first half of the youth asset revenue was 0.14 billion, an increase of 0.07 billion over the previous year, with the contribution of the Three Gorges Project being the main increase. Currently, the project started on July 26, and the company said it expects to confirm 20 million+ in Q3.

E-commerce fees have doubled over the same period last year, and the construction of online channels has gradually progressed. 2024H1's e-commerce processing fee was 0.128 billion yuan, an increase of 120% over the previous year. Online channels are growing rapidly. The subsequent capacity building of online retail channels is worth focusing on monitoring and observing.

Risk warning: Consumption recovery falls short of expectations, new projects fall short of expectations, housing depreciation, shareholder holdings reduction, etc.

Investment advice: The company's performance recovered steadily in the first half of the year. Among them, the outstanding performance of new projects once again verified the company's ability to build projects and improve projects; however, in line with the latest tracking, the year-on-year decline in the total number of traditional inventory projects during the July-August peak summer season increased compared to the second quarter, and due to the impact of the overall consumption environment, the number of stock project operations for the next year will still need to be continuously tracked. Based on this, we lowered our stock project contributions for the next 3 years and raised the performance of new projects after the epidemic. At the same time, we have not considered future potential new project contributions. We have downgraded the company's 2024-2026 net profit to 1.11/1.28/1.48 billion yuan (previously 1.23/1.5/1.73 billion yuan), and the corresponding dynamic PE is 18/16/14x. The company's business model is excellent. The existing equity incentive goals in the current consumption environment are expected to further stimulate management's subjective activism. Subsequent online retail channel capacity building is worth watching, and increasing dividends with sufficient cash reserves is also worth looking forward to, maintaining the “superior to the market” rating.