Incidents. The company published its 2024 semi-annual report. In the first half of 2024, the company achieved operating income of 1.044 billion yuan, a year-on-year decrease of 62.35%; net profit to mother was 1.023 billion yuan, a year-on-year decrease of 11.69%.

The company's municipal revenue continued to grow in the first half of the year. 1) In the first half of 2024, the company's real estate business achieved a contract sales area of 0.0027 million square meters (0.0023 million square meters for commercial housing projects, 0.0004 million square meters for affordable housing projects), a year-on-year decrease of 98.92%; achieved a contract sales amount of 0.123 billion yuan (0.122 billion yuan for commercial housing, parking spaces, etc., 0.001 billion yuan for affordable housing projects), a year-on-year decrease of 92.91%. The new construction area was 0.0516 million square meters, a year-on-year decrease of 70.55%. The completed area was 0.0617 million square meters, a year-on-year decrease of 70.98%. Real estate business revenue was 0.446 billion yuan, a year-on-year decrease of 80.73%. 2) The company accelerated scientific and technological innovation and industrial upgrading, actively expanded market-based sewage equipment operation and maintenance projects, completed the “Jiangsu Green Development Leading Enterprise” application process, and obtained 13 authorized invention patents and utility model patents. In the first half of 2024, the company's municipal business achieved revenue of 0.598 billion yuan, an increase of 30.23% over the previous year.

Venture capital focuses on the cutting edge of technology, and an industrial merger and acquisition fund controls Chenpai Pharmaceutical. 1) In the first half of 2024, the company focused on cutting-edge fields such as biomedicine and new semiconductor materials, and invested in 3 additional projects: Dinoveva, Ruichu Pharmaceuticals, and leading the way in microelectronics. 2) The company strengthened post-investment management, strengthened the revitalization of stock equity assets, and directly held 42.88% of Chenpai Pharmaceutical's shares through the physical distribution of Zhongyu Hi-Tech Health Industry M&A Fund, becoming its largest shareholder. At the same time, a management team was stationed to lead the operation and management of Chenpai Pharmaceutical. 3) The company continues to empower invested enterprises, actively organizes in-depth industry and management learning and exchanges with invested enterprises, and promotes resource sharing and risk mitigation. In the first half of 2024, the company's investment in the Sunshine Market was listed on the Hong Kong Stock Exchange. 4) In the first half of 2024, the company achieved investment income of 1.057 billion yuan, a year-on-year decrease of 7.32%; achieved fair value change income of -0.112 billion yuan.

Debt levels are low, and financing costs continue to decline. As of June 30, 2024, the company's balance ratio was 49.16%; at the end of the period, the company's total interest-bearing liabilities were 10.234 billion yuan, accounting for 26.56% of total assets.

In the first half of 2024, the company's average financing cost was 2.81%, down 0.27 percentage points from the previous year.

In the second half of 2024, the company will continue to analyze and judge market and industry trends, reduce costs and increase efficiency, enhance its market competitiveness, and promote healthy and stable business development. In the real estate business, pay close attention to and grasp policies and market trends, innovate sales ideas, and promote sales repayments for existing projects. “Tang” products accurately target customers and speed up project sales. “Hospital” products actively explore policies such as housing ticket purchases, promote inventory elimination, and revitalize business cash flow.

The reasonable value range is 6.00-7.00 yuan, and the rating is “superior to the market”. We expect the company's 2024 and 2025 EPS to be 1.00 yuan and 1.11 yuan respectively. The company was given 6-7 times dynamic PE in 2024, with a corresponding reasonable value range of 6.00-7.00 yuan, maintaining the company's “superior to the market” rating. Risk warning: The company faces the risk of interest rate hikes and policy regulation, as well as the risk of unsuccessful transformation.