Leading in smart cars and medical IT, maintaining “buy” ratings

In the first half of the year, the company's health business grew rapidly, the smart car business continued to expand, and the advantages of the core racetrack were highlighted.

The company has been deeply involved in the field of health insurance informatization for many years, leading market share, and rich experience in big data analysis and data services. With the gradual implementation of health insurance data element policies, the company is expected to continue to benefit. We maintain our profit forecast. We expect net profit to be 302, 402, and 503 million yuan for 2023-2025, EPS of 0.25, 0.33, and 0.41 yuan. The current stock price corresponds to PE 37.9, 28.5, and 22.7 times, maintaining the “buy” rating.

Event: The company released its 2023 semi-annual report

In the first half of 2023, the company achieved revenue of 3.89 billion yuan, an increase of 14.98% over the previous year, achieved net profit of 95 million yuan, an increase of 14.50% over the previous year, and achieved net profit of 27 million yuan after deducting non-return net profit of 27 million yuan, an increase of 128.04% over the previous year.

In the second quarter alone, the company achieved revenue of 2,233 million yuan, a year-on-year increase of 6.12%, a year-on-year net profit of 90 million yuan, a year-on-year decline of 20.46%, net profit of 54 million yuan after deducting non-return net profit of 54 million yuan, a year-on-year decline of 31.67%.

The big health business is growing rapidly, and the smart car business continues to expand

(1) By business, revenue from healthcare and social security, smart car connectivity, smart cities, enterprise connectivity, etc. in the first half of the year was 7.52, 16.08, 6.04, and 927 million yuan respectively, compared to +35.65%, +18.89%, +12.39%, and -1.36%, respectively. In the field of big health and smart cars, the company continues to maintain a leading position in the industry. The big health business is growing rapidly, the smart car business continues to expand, and the advantages of the core track are prominent.

(2) The company's overall gross margin in the first half of the year was 29.60%, down 2.66 percentage points from the previous year, mainly due to a 6.54 point decline in the gross margin of the smart smart car interconnection business. The sales, management, and R&D expense ratios were 6.24%, 7.49%, and 11.58%, respectively, and -0.86, -0.45, and +0.24 percentage points from the previous year, respectively. The company's expense rate is well controlled.

The field of health insurance informatization has remarkable advantages and is expected to benefit from the implementation of health insurance data element policies

Since 2023, data element policies have been implemented intensively, and the value of data elements has been further highlighted. The company has been deeply involved in the field of health insurance informatization for nearly 30 years. It has participated in the construction of national and provincial health insurance information platforms. It has a leading market share and rich experience in big data analysis and data services. With the gradual implementation of health insurance data element policies, the company is expected to continue to benefit. In the first half of the year, the company increased the strategic layout of the AI ecosystem, established the Neusoft Magical Technology Research Institute, and launched a large medical model and various AI+ industry applications. The future is promising.

Risk warning: Business progress falls short of expectations; increased competition in the industry; risk of exchange rate fluctuations.