Event: the company disclosed its 2023 semi-annual report that its total income in the first half of the year was 97.065 billion yuan (year-on-year + 11%), its net profit was 1.36 billion yuan (year-on-year-40%), and its basic EPS was 0.17 yuan (0.27 yuan for the same period last year). The company's revenue growth was mainly contributed by the happy sector; the year-on-year decline in net profit was mainly due to higher gains from the disposal of corporate profits and the sale of financial investments in the same period last year.
The Happy sector recovered significantly, and the core subsidiaries maintained a high contribution. 1) from the perspective of the four major sectors: the income of the health / happiness / affluence / intellectual building sector 2023H1 is 23.8 billion yuan / 43 billion yuan / 25.4 billion yuan / 5.5 billion yuan respectively, compared with the same period last year, + 2.0% Universe 34.1% Universe 7.9% Universe 6.5%; the net profit of returning to the mother is 360 million yuan / 770 million yuan / 200 million yuan / 120 million yuan, respectively, compared with the same period last year + 24.3% Universe 1366.7% Mel80.4% Universe 88.6%. Among them, the profit growth of the healthy sector was mainly contributed by Shanghai Fosun Pharmaceutical; the high growth of the Happy sector mainly benefited from the strong recovery of Yuyuan shares and Fosun Travel after the epidemic; the rich plate was mainly subject to the reduction of profits brought about by the sale of non-core assets and some sales transactions; the strategic exit of the intellectual building sector led to a relatively large drop in profits due to joint venture investment. 2) from the perspective of the four core subsidiaries: Yuyuan shares, Shanghai Fosun Pharmaceutical, Fosun Portugal Insurance, Fosun Travel 2023H1 accounted for 73% of the income contribution. Among them, Yuyuan Garden realized net profit of + 225.8% to 2.22 billion yuan in the first half of the year compared with the same period last year, mainly due to the increase in net profit in the consumer industry sector and the increase in investment income brought by the disposal of subsidiaries; Liuwen turned a profit to 470 million yuan, and Club Med turnover was + 32% compared with the same period in 2022, reaching 120% in the same period in 2019.
The focus of core industries is accelerating, with overseas income accounting for nearly half. The company accelerated its strategic focus and focused on the main track of household consumption. 2023H1 realized industrial operating profits of + 5.5 to 3.37 billion yuan compared with the same period last year, and + 66 per cent year-on-year after excluding disposed corporate profits. In addition, the company is also actively enabling overseas expansion, 2023H1 achieved overseas revenue of 44.09 billion yuan, accounting for 45% of total revenue, covering 35 + countries and regions. We are optimistic that the company will focus on deepening the development of the main industry and consolidate the operation capacity of the industry for a long time.
The overall liquidity is abundant and the leverage ratio is gradually reduced. 2023H1 headquarters level / consolidated statement level respectively completed asset withdrawal to achieve cash return of more than 14 billion yuan / more than 20 billion yuan, further tamping liquidity. As of the end of 2023H1, the group's total debt / total capital at the consolidated level was 51.8%, up from-1.2pct at the end of last year; the group-wide leverage ratio dropped to 51.8% from 53.0% at the end of last year. We believe that the measures taken by the company to invest and finance at both ends and actively optimize the balance sheet have achieved certain results, which is expected to thicken the safety pad for the follow-up development.
Investment advice: maintain a buy-An investment rating. We are optimistic that the company will take the innovation-driven global household consumption industry group as its strategic position and drive sustainable growth in its performance in the long run. It is estimated that the EPS of the company from 2023 to 2025 will be 0.51,0.71 and 0.89 yuan respectively, with a target price of HK $5.96, corresponding to 11 times 2023 EPS E (commuted exchange rate).
Risk hints: macroeconomic fluctuations / uncertainty of financing progress / less-than-expected strategic advance