Anxin International reported that Lihong Inspection (01586) achieved a revenue of HK $505 million in the first half of the year, an increase of 17% over the same period last year; a gross profit of 16.773 billion yuan, an increase of 14.31% over the same period last year, and a gross profit margin of 3.54% to 45.68%; a net profit of HK $68.5 million, a sharp increase of 50.2% over the same period last year; and a net profit of HK $35.8 million, an increase of 34.8% over the same period last year, and a net profit rate of 1.26%.
The bank pointed out that the company will acquire two environmental testing companies in 2020, and continue to absorb relevant talents in the ESG industry through the "federal system", continue to expand the ESG talent team, and make a good talent reserve for the follow-up ESG business development. In the context of dual-carbon and green development, the company will focus on the development and development of ESG-related business in the future; pre-emptively layout the track to gain the first-mover advantage of the ESG industry. At present, although the company's ESG business accounts for a relatively small, but strong growth, optimistic about the future development and growth of the company's ESG business.
The bank continued to point out that thanks to the high brand credibility of the company's industry, the company's trade guarantee business customers are stable and the business volume is growing strongly. The bank is optimistic about the growth of the company's traditional trade protection business and the development of the emerging ESG business in the future. Maintain the target price of HK $2.88 per share, corresponding to 2023 / 2024 / 2025 PE is 16 times / 13 times / 9.9 times, 74.5% higher than the recent closing price, maintaining the "buy" rating.