Incident: The company released its 2023 semi-annual report. 23H1 achieved operating income of 212 million yuan, yoy -25.0%; realized net profit of 7.94 million yuan, yoy -71.7%; realized net profit of 6.45 million yuan, yoy -71.1% after deducting non-return net profit. Looking at the second quarter alone, 23Q2 achieved operating income of 105 million yuan, yoy -14.7%; realized net profit of 6.29 million yuan, yoy -45.4%; realized net profit of 5.97 million yuan, yoy -11.0% after deducting non-return net profit.

Developer service: The cumulative number of developer service SDK installations exceeded 100 billion 23H1. The company's developer service revenue was 26.74 million yuan, yoy +4.0%, and gross margin was 63.9%. 23 In the first half of the year, the company accelerated iteration of existing product functions, deepened the push scenario business, and achieved obvious results in various industries such as video, music, social networking, travel, and e-commerce, which contributed to a simultaneous increase in the utilization rate of the push message channel, message click rate, and user conversion. As of 23H1, the cumulative number of developer service SDKs installed has exceeded 100 billion, of which the total number of SDKs for smart IoT devices has exceeded 300 million, and the daily activity of user operation platforms has exceeded 90 million.

Data services: Public services grew steadily, and commercial services declined due to advertising budget transmission links. 23H1 The company's public service revenue was 126 million yuan, yoy +6.1%, and gross margin was 74.5%. The government budget was under pressure in the first half of the year, but the company's public services maintained steady growth. A strong recovery was achieved in the second quarter, covering more than 2,800 districts and counties across the country. New and old SaaS products form a combination to jointly promote market expansion, and at the same time, the DiOS project-based business is rapidly expanding.

23H1's commercial service revenue was 57.21 million yuan, YOY -58.2%, and gross margin was 66.4%. Among them, service revenue increased by 19.03 million yuan, yoy -79.5%; revenue from energy enhancement and risk control services was 32.58 million yuan, yoy +1.6%.

The year-on-year decline in service growth was mainly due to a decline in the budget to attract new Internet customers; the steady growth in energy enhancement services benefited from customers paying more attention to the efficient operation of existing users. In terms of brand services, the cooperation between the company and Minglue Group has covered world-renowned beauty, catering, and snack brands. We believe that with the restoration of consumption intentions, advertisers' budgets are expected to be fully released, which in turn will drive the company's commercial service revenue to pick up.

Lay out the data element industry infrastructure ahead of time to build an ecological collaborative industry infrastructure for data element development. In terms of industry infrastructure, the Zhejiang Big Data Joint Computing Center promoted by the company has implemented various industry scenarios such as marketing and finance; in terms of technical reserves, on the basis of a large, controllable model, the company explores the integration of relevant technologies with existing products and services in the fields of digital transportation, public safety, digital marketing, etc., to promote the digital upgrading of various industries and government departments and the release of data element value.

Investment suggestions: Considering the uncertainty about the rate of recovery of advertising revenue, we lowered the company's revenue from 2023-2025 to 5.4/65/ 750 million yuan (previous value was 63/7.2/780 million yuan), yoy +3.5%/+20.4%/+14.8%; reduced 2023-2025 net profit to 35.4/55.9/72.1 million yuan (previous value was 65/104/133 million yuan), yoy +34.7%/+57.8%/+29.0%, corresponding to August 25 At daily closing prices, 23-25 PE was 186/118/92 times, respectively.

Risk warning: Policy supervision is uncertain, industry competition is intensifying, multi-field layout management is becoming more difficult, project progress falls short of expectations, investment companies' performance falls short of expectations, etc.