1H21: In Line With Expectations; PATMI Up 65% yoy

CES’ 1H21 results were in line with expectations with net profit attributable to
shareholders growing 65.3% yoy to Rmb283.0m, which is above the profit guidance of >55% growth. Overall gross margin fell 0.8ppt to 29.9%, mainly due to reduction of subsidies on social security payments and lower margins from higher expansion costs from the fast-growing community VAS segment. Management targets 38% earnings CAGR from 2023-28. Maintain BUY with a lower target price of HK$21.77.