According to the company's half-yearly report released on August 14, the company's 23H1 realized operating income of 2.193 billion yuan, an increase of 7.89% over the same period last year, and its parent net profit was 217 million yuan, an increase of 0.55% over the same period last year. 2023Q2 realized operating income of 1.262 billion yuan, an increase of 10.90% over the same period last year, and net profit of 76 million yuan, down 51.28% from the same period last year.

Focus on the main business, operating income continued to grow, gross profit margin increased 5.49pct year-on-year. The company achieved operating income of 2.193 billion yuan in the first half of 2023, an increase of 7.89% over the same period last year, with a gross profit margin of 21.21% in the first half of the year. Increased 5.49pct compared with the same period last year. In the first half of 2023, the net profit belonging to shareholders of listed companies was 217 million yuan, an increase of 0.55% over the same period last year. The growth of the company's operating income is mainly due to the expansion of the company's business scale, the expansion of CCTV projects and the budget of new customers in the automotive industry.

With a view to the future, a 23-year stock incentive plan is issued to demonstrate management's confidence in future performance. The company issued this year's draft restricted stock incentive plan on May 26, which intends to grant 477500 restricted shares to 44 directors, middle managers and business backbones at a price of not less than 64.43 yuan per share.

The performance evaluation conditions for the lifting of sales restrictions from 2023 to 2025 are that the net profit is not less than 1.56 billion yuan, and the proportion of lifting restrictions is 40%, 30%, 30%, respectively. Amortization expenses have little effect on the net profit of each year.

Combined with the assessment conditions, the company's net profit CAGR of 2020-2025e is 27.52%.

The establishment of factor subsidiary makes the growth trend of data trading business more clear, and the development of AI intelligent marketing tools promotes the expansion of long-tail users. The company issued an announcement on July 20 to set up a wholly-owned subsidiary Guizhou Sanrenhang data elements Intelligent Technology Co., Ltd., which will provide comprehensive digital technology services, including data acquisition, digital media resource procurement and digital transformation. The establishment of the subsidiary marks a clearer realization model of the company's data asset trading business, which is expected to deeply benefit from the increase in data demand in the AI era and open the second growth curve.

At the same time, the company is working with iFLYTEK to develop a dedicated large model in the marketing field and SaaS deployment intelligent marketing software based on this model. The tool will provide SaaS services and automatically generate brand strategy, media strategy, posters, copywriting, and virtual human resources for e-commerce live streaming for customers, which is expected to cover more than 2 million small and medium-sized advertisers. We believe that AI marketing tools will complement the company's existing business model, expand long-tail customer resources, realize the realization of software products based on data and artificial intelligence, and the profit margin is expected to be further improved.

Maintain the "highly recommended" investment rating. We estimate that the company's homing net profit from 2023 to 2025 will be 1.05 billion RMB 1.38 trillion respectively, corresponding to 10.1 pm 7.7 pm 6.5 times earnings.

Risk tips: offline advertising market recovery is not as expected; customers focus on risk; AI technology research and development is not as expected.