The company released its 2022 annual report and 2023 quarterly report. The company achieved operating income of 546 million yuan in 2022, -5.01% year on year, and achieved a net loss of 75.07 million yuan, or -921.42% year on year; the company achieved revenue of 144 million yuan in 2023Q1, +20.96% year on year, and Guimu's net loss of 18.251 million yuan, -42.70% year on year.

The gross margin of the traditional ticketing business declined slightly. On the revenue side, the company's ticket products achieved revenue of 386 million yuan in 2022, -1.07% over the same period last year. It is estimated that this is mainly due to a decline in ticket orders. On the profit side, the gross margin of the business in 2022 was 17.94%, -3.40pct compared to the previous year, mainly due to increased competition in the industry.

The company's sales/management/R&D expenses ratio in 2022 was +0.72/3.85/0.15pct, respectively, and the 2023Q1 company management expense ratio has begun to be repaired. Financial expenses in 2022 were 164.41 million yuan, +385.11% over the same period last year. The increase in corporate financing loans caused high interest expenses.

Nvidia chips empower AI centers, short-term performance is expected to improve, and the long-term industrial ecosystem will flourish. The company recently announced a change in the use of funds raised, terminated the electronic lottery R&D center project, and plans to use 200 million yuan of the remaining funds raised from the project for the Beijing AI Innovation Empowerment Center project. The Beijing AI Innovation Empowerment Center project and Nvidia will deploy the world's most advanced edge computing chips to provide customers with AI integration services. (1) The Beijing AI Innovation Empowerment Center provides high-performance supercomputing services for AI model training and inference based on Nvidia AI chips. According to IDC and wave information, China's intelligent computing power scale CAGR is expected to reach 52.3% in 2021-2026, far exceeding general computing power. In the explosion of intelligent computing power, the company is seizing the first-mover advantage to invest in intelligent supercomputing centers, which is expected to benefit the core industry dividends. (2) The company's supercomputing center is equipped with Nvidia AI high-performance chips, leading the industry in terms of computing performance, energy consumption, etc., and occupying technical barriers. (3) The company is responsible for the long-term operation of the AI center. Through models such as leasing supercomputing center cabinets and AI training service support, the company is expected to achieve sustainable cash flow and optimize the business model. Relying on the Nvidia industry ecosystem, the company cultivates artificial intelligence talents to customers and provides customers with customized chip solutions, which is expected to enrich the company's industrial ecology.

Profit prediction: AI business drives company performance recovery. The company's revenue for 2023-2025 is estimated to be 58/ 76/950 million yuan respectively, and the net profit attributable to the mother in 2023-2025 is 628/2359/ 38.34 million yuan respectively. Using the PS valuation method, 2024E's revenue was given 20 times PS valuation, corresponding to the target price of 30.4 yuan. It was first covered and given a “buy” rating.

Risk warning: downstream demand falls short of expectations, profit forecasts and valuation judgments fall short of expectations