The company released its semi-annual report for 2023:

2023H1, the company achieves operating income of 610 million yuan /-3.62%, net profit of 87 million yuan /-17.15%, net profit of 0.82 billion yuan /-14.59%; dismantling Q2 alone, the company achieves operating income of 331 million yuan /-9.60%, net profit of 0.44 billion yuan /-16.46%, and net profit of 0.44 billion yuan /-2.58%. The decline in revenue was mainly due to the transfer of equity in Zhejiang Shangbai, a holding subsidiary during the reporting period; in addition to the transfer of equity, the decline in profit was mainly due to the delivery of new buildings and an increase of about 13 million in depreciation and amortization compared with the same period last year.

Weak consumption and changes in business structure led to a decline in gross profit margin, while equity transfer and the delivery of new buildings led to a decline in net profit margin.

The gross profit margin of 2023H1 is 32.32%/-7.15pcts, which is mainly due to the decline of gross profit margin of stock business caused by weak consumption, and the change of business structure, that is, the increase in the proportion of brand online marketing services. The sales / management / R & D / financial expense rate is 12.08%, 6.73%, 1.41%, 1.41% and 2.03%, compared with the same period last year. The decline in management and R & D expenses is mainly due to the transfer of equity in Zhejiang Shangbai, a holding subsidiary. The net interest rate is 14.27%/-2.33pcts.

The service brand increases steadily, the general agent business expands, the brand cooperation deepens.

In the first half of 2023, on the basis of ensuring the basic stability of the core stock customers, 16 new brands were added, including Si Weishi, Lin Qingxuan, Linefriends, Gao Jiesi, etc.; at the same time, it expanded the general generation business and added cooperation with Bai Jieli, illy and Jiebi; deepened brand cooperation and established a comprehensive and in-depth strategic cooperation relationship with Church Dwight of the United States. From the perspective of sub-business model, 2023H1 brand online marketing service income is 218 million yuan / + 3.10%, gross profit is 34.47% Accord 2.74pcts; Brand online management service income is 14.6 billion yuan /-39.67%, gross profit is 48.99% Mobil 3.94pcts; online distribution revenue is 179 million yuan / + 44.08%, gross profit margin 16.53%/-2.89pcts Content e-commerce service revenue of 62 million yuan / + 23.98%, gross profit margin 32.41%/-1.64pcts.

Investment advice:

Buy-An investment rating. Due to the impact of weak consumption and equity transfer, and combined with the performance in the first half of the year, we expect the company to achieve operating income of 16.08 million yuan in 2023-2025, year-on-year + 4.52%, 15.54%, 9.76%, and 2.1977, 323 million yuan in net profit, compared with + 21.77%, 26.44%, 16.46%. 2023 35xPE, corresponding to the 6-month target price of 32.16 yuan.

Risk tips: macroeconomic downside risks, industry competition intensification risks, platform policy change risks and so on.