1H21's performance is in line with our expectations.

The company announced 1H21 results: revenue of 2.127 billion yuan, an increase of 15.98% over the same period last year; net profit of 51 million yuan, deducting 48 million yuan of non-net profit, reversing losses over the same period last year; of which 2Q21 revenue of 1.153 billion yuan, an increase of 18.4%, a slight decrease of 1.3% over the same period last year, and a net profit of 34 million yuan, with an increase / ring increase of 2.3%, 92.3% and 92.3%, respectively, in line with our expectations.

Development trend

Continue to increase the scale of social services, charging operating profits restored to the level of the same period in 19 years. The company actively promotes the construction of charging facilities. 1H21 has built 94 charging stations / charging piles, an increase of 213% / 336% over the same period last year, of which the proportion of new charging piles for social vehicle service has reached 95%. As of 1H21, the number of charging stations / charging piles in the company has increased to 439 / 2831, including 1030 charging piles for public transportation and 1801 social charging piles. The company continues to improve the scale of charging operation of social vehicles. Accordingly, the company's 1H21 new energy charging business revenue achieved a higher growth rate of 32.8%, gross profit margin increased to 33.6% year-on-year, fixed to the level of the same period in 19 years. We believe that with the acceleration of charging pile construction and the increased charging demand for buses and social passenger vehicles within the group, the growth of the company's new energy charging business is expected to accelerate in 2021. Traditional business has recovered steadily with high structural growth. The revenue of 1H21's traditional advertising media and automobile service business reached 161 million yuan and 1.672 billion yuan, an increase of 5.65% and 15.28% respectively over the same period last year. In terms of business segment, car rental and car disassembly business respectively benefited from the recovery of travel demand after the epidemic and the high growth of 62.52% of the vehicle replacement cycle compared with the same period last year, while bus body media and automobile 4S electricity business were affected by fierce market competition and lack of cores in the first half of the year, which decreased slightly by 5.46% and increased by 4.3% respectively compared with the same period last year. In terms of profit, 1H21 Automobile 4S store benefited from price repair, car rental and disassembly business benefited from a strong recovery in downstream demand, gross profit margin increased by 4.30ppt, 20.58ppt, 3.69ppt, respectively, compared with the same period last year; advertising media business profits are under short-term pressure. The operating cash flow of 1H21 Company has increased significantly, and the cost control has been effective. The company's 1H21 strengthened its working capital control. The operating cash flow of 1H21 was 130 million yuan, an increase of 127.63% over the same period last year. During the period, the expense rate decreased by 0.7ppt to 13.46% compared with the same period last year, driving the net profit margin year-on-year / month-on-month improvement of 0.1ppt/1.1ppto profit forecast and valuation

We keep our profit forecast for 21Universe 22 years unchanged at 1.34 / 143 million yuan, and maintain an outperform industry rating and a target price of 4.50 yuan. the current stock price / target price corresponds to 20.6x/19.3x Pmax E and 27.1x/25.4x Pmax E in 21 / 22, with 31.6% upside space.

Risk

The utilization rate of charging piles climbed less than expected, and car sales in 4S stores fell short of expectations.