The company released its 2024 three-quarter report. 24Q3 achieved revenue of 0.342 billion yuan, -14.17%; net profit to mother 0.12 billion yuan, +142.97% year over year; net profit after deducting non-return to mother 0.046 billion yuan, -10.74% YoY. Net profit to mother increased significantly in Q3, mainly due to the higher year-on-year increase in income from changes in fair value of financial assets. The stock business is developing steadily, external expansion is progressing steadily, and the rating for increasing holdings is maintained.

Key points to support ratings

Revenue declined slightly, and changes in fair value boosted Q3 profits. 24Q1-3 achieved revenue of 0.932 billion yuan, -3.29% year over year; net profit to mother 0.202 billion yuan, -16.53% year over year; net profit after deducting non-return to mother 0.139 billion yuan, -13.95% year over year. Among them, 24Q3 achieved revenue of 0.342 billion yuan, -14.17%; net profit to mother 0.12 billion yuan, +142.97% year-on-year; net profit after deducting non-return to mother 0.046 billion yuan, or -10.74% YoY. Q3 Net profit to mother increased significantly, mainly due to a year-on-year increase in income from changes in the fair value of the company's financial assets.

Deepen the endogenous development of the main industry and actively promote foreign investment. In terms of stock business, in the first three quarters of 2024, the company hosted and hosted 17 exhibitions, with a total scale of over 1.01 million square meters; 9 events were held, with a total number of participants exceeding 0.033 million; the Shanghai World Expo Exhibition Hall operated by the company held a total of 65 exhibitions and events, with a total rental area of over 8 million square meters. In terms of external expansion, in order to further develop the WAIC project, in July, the company agreed to invest 50 million yuan to establish Shanghai Donghao Lanshengweike Gravity Co., Ltd., to build an ecological service provider with global influence and an artificial intelligence conference as the core, and actively lay out an artificial intelligence circuit. Furthermore, in order to further advance the global strategy and accelerate the expansion of overseas markets, it was agreed to invest 10 million US dollars to set up a wholly-owned subsidiary in Hong Kong to build an overseas business platform and investment and financing platform, which is expected to accelerate the pace of going overseas.

Increase the frequency of dividends and focus on shareholder returns. According to the announcement, the company paid an interim profit dividend for 2024, based on deducting the share capital of 724,183,568 shares in the repurchase of shares in the special securities account, and distributed a cash dividend of 0.60 yuan (tax included) to all shareholders for every 10 shares. A total cash dividend of 43.45 million yuan was paid, accounting for about 52.86% of net profit due to mother in the first half of '24.

valuations

The company's various existing businesses, such as exhibitions and events, grew steadily; continued to contribute to performance growth through endogenous cultivation and extrinsic acquisitions. Considering the pressure on short-term performance and large fluctuations in the value of financial assets, we adjusted the 24-26 net profit to mother of 0.259/0.292/0.321 billion yuan, corresponding P/E of 20.5/18.1/16.5 times, maintaining an increase in holdings rating.

The main risks faced by ratings

The risk of macroeconomic downturn, epitaxial expansion falling short of expectations, and changes in the fair value of financial assets.