Investment events:

On August 27, 2023, Jiuyuan Yinhai released its 2023 semi-annual report.

Main points of investment

Performance is eye-catching, profits are growing steadily, and costs are subject to prolonged acceptance cycle. in terms of operation, H1 achieved revenue of 519 million in 2023, an increase of 22.70% over the same period last year, of which 23-year Q2 achieved revenue of 331 million, an increase of 20.92% over the same period last year. In terms of business, the company's medical and health insurance business income in the first half of the year was 232 million, an increase of 4.01% over the same period last year, 260 million for smart city and digital government affairs, an increase of 47.88% over the same period last year, and 25 million for Internet operation, an increase of 98.80% over the same period last year. Civil-military integration business revenue 69900, a decrease of 98.69%. In the first half of the year, the company's revenue growth mainly benefited from the revenue growth of smart city and digital government industry, in which the revenue of software and operation and maintenance services of digital government industry increased greatly, mainly for business expansion in southwest, northeast, south and central China.

In terms of profits, H1 Company achieved 85 million of net profit in 2023, an increase of 5.10% over the same period last year, deducting 76 million of non-return net profit, an increase of 5.04% over the same period last year, of which 23-year Q2 achieved net profit of 68 million, an increase of 4.83% over the same period last year, deducting 62 million of non-return net profit, an increase of 6.58% over the same period last year.

In terms of costs and expenses, the operating cost of H1 Company in 23 years was 255 million, an increase of 50.10% over the same period last year, mainly due to the prolonged acceptance cycle of the project, and because the company's revenue growth was mainly due to the increase in revenue from software development and operation and maintenance services. the related labor costs, travel expenses, office expenses and other expenses also increased greatly. In 23, the sales cost of H1 company was 66 million, an increase of 0.85% over the same period last year, and the management cost was 57 million, an increase of 1.10% over the same period last year. The total R & D investment was 122 million, an increase of 9.48% over the same period last year.

The field of wisdom and people's livelihood is in the forefront, and the industry barrier is expected to remain strong. The company is a wise people's livelihood service provider, backed by the Chinese Academy of things, and the market covers 29 provinces, 228 cities and 160000 medical and medical institutions, providing services for 700 million members of the public. National Healthcare Security Administration, Ministry of Human Resources and Social Security Industry Informatization Strategic partner It has undertaken a series of major projects, such as the national remote medical settlement platform, the national social security public service platform, the national unified software of the employment management information system, and the Jinmin project application support platform. the market share in the field of people's livelihood information ranks in the forefront of the industry. At present, the company supports the operation and maintenance of the medical insurance information platform in 23 provinces across the country, and continues to plough in more than 100 cities and more than 200,000 medical insurance institutions across the country. at present, the market in the medical and health industry has covered more than 2800 hospitals across the country. the Renshe market covers 21 provinces and undertakes 12 livelihood information projects such as the National Unified Software of the Ministry of Human Resources and Social Affairs Employment Management Information system. We believe that the company has industry-leading project acceptance rate and urban coverage, has been deeply cultivated in the field of digital government affairs such as health insurance and people's society for many years, and is rich in customer resources. with the increase in the number of customers and government organizations of the company's health insurance services, industry leadership and project delivery capacity are expected to be further improved, and will continue to have strong industry resource barriers.

Relying on the policy landing and industry leading advantages, it is expected to open the growth space of data factors in 2023. Guangdong, Sichuan, Shandong, Zhejiang, Sichuan, Beijing and other provinces and cities have issued relevant policy documents on data elements one after another to standardize and promote data security and compliance transactions, realize the value of data elements, and promote the landing application of national strategy, and industrial development is expected to enter an accelerated development stage. The company released "Jiuyuan Yinhai Hospital Service bus products" and "Jiuyuan Yinhai Medical Business Model driven Development platform" to realize the sharing and exchange of data elements in the multimodal medical insurance industry. Actively carry out the construction of health insurance data zones, capitalization, product-oriented and service-oriented innovation of medical insurance data elements, and Jiuyuan Yinhai's "Hospital Disease diagnosis and treatment path knowledge Base and Medical expense Analysis system", as the data capabilities of the first batch of Guangzhou data Exchange, it is an important innovation and advance practice of the company in the field of people's livelihood. At present, the company is actively carrying out innovative R & D and landing practice of data products, data capabilities and data services in the field of people's livelihood, enabling in-depth mining of the value of data elements in medical insurance, digital government affairs and smart cities. to promote the market-oriented and high-quality development of data elements. We believe that in the future, with the promotion of relevant policies on the liberalization of public data, the company is expected to open up a new growth space in digital government affairs and health insurance data elements, relying on high coverage and excellent projects in medical insurance and other information fields. performance increment is expected.

Systematic technology fusion support capability, AI, cloud computing and other empowered medical industry digital and intelligent process companies carry out basic technology research and achieve technological breakthroughs in cloud computing and cloud native, low code, big data, artificial intelligence, mid-Taiwan, micro-services, data elements, large language models, blockchain, information security, information creation, etc., and effectively support the industry's product research and implementation. It has been applied in the fields of digital government affairs and medical insurance, and has formed more mature domestic industry application middleware products and Yinhai trusted integration client products, including Ta+3 component integrated platform, low code development platform, Yinhai Cloud platform (PaaS), application support platform, MDLife mobile application development platform, Horizon big data platform, Huanzhi artificial intelligence platform and so on. Among them, the company "see wisdom?" The "artificial Intelligence Industry Application platform" has low-level technology R & D capabilities in machine vision and natural language fields, and has completed the research and application of AI technology in face recognition, OCR, image recognition, video understanding, natural language processing, knowledge graph, etc., and has incubated AI products in clinical fields such as medical image recognition, clinical assistant decision-making and intelligent doctor order management through cooperation with third-class hospitals. We believe that the company has the ability to use AI and other technologies to further improve and improve the service quality of the current project, and tap the potential benefits of data elements.

Profit forecast and valuation

We estimate that the company's operating income from 2023 to 2025 will be RMB 1.536 million, respectively, with a year-on-year growth rate of 19.80%, 17.72% and 17.77%, respectively. The net profit of 2023-2025 will be RMB 2.42 million, and the year-on-year growth rate will be 31.25%, 39.68% and 11.30%, respectively, corresponding to 36.76 times of Pamp E in 2024, maintaining the "overweight" rating.

Risk hint

The competition in the industry intensifies, the business development falls short of expectations, the products and services provided can not meet the policy requirements in time, and the policy of data elements falls short of expectations.