Rapid growth in performance, business transformation led to a decline in gross profit margin. In the first half of 2020, the company achieved operating income of HK $258 million, an increase of 60.8% over the same period last year, and the profit attributable to owners of the company was HK $441 million, an increase of 45.6% over the same period last year. According to the specific income structure, the parking asset management operation business accounted for 60.2% of the operating income during the period, and the fund management business accounted for 39.8% of the operating income, while the iron ore trading business, which accounted for nearly 30% in the same period last year, was completely divested, marking the complete completion of the company's business transformation. During the period, the company's gross profit margin was 15.3%, down 38.9% from the same period last year. The main reasons are as follows: 1. The income scale of the parking sector has increased significantly, but because the business is in a period of rapid expansion, the gross profit margin is relatively low. 2. Affected by the epidemic in the first half of the year, the profitability of transportation hub parking projects such as airports has declined.
The income of parking business has doubled, and the size and income of the fund have increased. The company's parking sector achieved revenue of 155 million Hong Kong dollars in the first half of the year, up 126.5 percent from the same period last year, with a net profit of 218 million Hong Kong dollars, making a profit for the first time, mainly due to the revaluation and appreciation of parking assets acquired at previous discounts, as well as the increase in the number of parking spaces put into operation during the period. During the period, the number of newly signed parking spaces is about 30,000, with a total of more than 100000 signed. In the first half of the year, the company's fund sector achieved revenue of HK $103 million, up 22.6% from a year earlier, and net profit of HK $77 million, down 41.7% from a year earlier. Excluding non-recurring profits and losses in 2019, it rose 67.4% from a year earlier.
Officially renamed the first course holding, the company is located in a high-quality track and the value of potential endogenous growth will be better discovered. During the period, the company changed its name to "first journey holding". Combined with the company's formal transfer to Hong Kong Stock Exchange in April this year, we believe that the company's high-quality track and potential endogenous growth will be better explored, which will lead to an increase in valuation.
Maintain the buy rating and raise the target price to HK $3.24 (the original target price is HK $2.10).
We have raised the company's EPS for 2020-2022 to HK $0.108 to HK $0.130 (originally forecast for HK $0.081 to 0.101). The average PE valuation of the comparable company in 2020 is 30x. Considering the high quality layout and development potential of the company in the parking asset operation field, we give the company a 20% valuation premium, that is, a valuation of 36x in 2020, corresponding to the target price of HK $3.24.
Risk hint. The acquisition of the parking lot is not as expected; the growth rate of the fund management scale is not as expected.