Event: the company released its 2023 interim report. In the first half of 2023, the company achieved revenue of 2.36 billion yuan, + 42.3% of the same period last year, and net profit of 40 million yuan, + 758.4% of the same period last year. In the single quarter of 23Q2, the company achieved revenue of 1.33 billion yuan, + 37.2% year-on-year, and net profit of 30 million yuan,-33.3% of the same period last year.

The business volume of 5G rich media news and international cloud communications has soared, and the performance has improved significantly. On the revenue side, the traditional SMS service was basically stable in the first half of 2023, and new business and international business grew rapidly, of which 5G rich media news business and revenue increased by 136% and 155.8% respectively compared with the same period last year. International cloud communications business volume and revenue increased by 274% and 325% respectively over the same period last year. In terms of cost, the company reduces costs and increases efficiency, and the expenses are well controlled. In the first half of 23, the comprehensive expense rate of the company's four items was 8.4%, a decrease of 3.2pp compared with the same period last year.

The growth curve of new business is steep and there are broad prospects for overseas markets. The company seizes the opportunity of upgrading 5G news, and the recognition of 5G rich media news products among enterprise customers is increasing continuously, and it will gradually enter the stage of large-scale development from the introduction period. The business volume of 5G rich media news in the first quarter of 2023 is close to 4 billion, an increase of 227.5% over the same period last year. In addition, 5G rich media news products have a high gross profit margin, contributing 30% to the company's gross profit in the first half of 2023.

In terms of AIM news, the product has covered 800 million mobile terminals by the end of 2022, and the company has reached a cooperation with the three major operators on the 5G message fallback solution, which is progressing smoothly. The company has built Fuxin platforms such as video text messages and AIM messages, and has successfully changed from a short message channel provider to a 5G message service provider with independent core technology and competitive barriers. In the future, with AIM news and other new business will continue to rise, the company has sufficient power for medium-and long-term development. In terms of international cloud communication business, on the one hand, the company helps domestic / foreign enterprises reach foreign / domestic customers, and on the other hand, based on the advantages of existing technology platforms, the company provides SMS and Fuxin platforms to international operators.

At present, the international cloud communication business is in its infancy, with the technical advantages of the company's international Fuxin platform, with the increase of the company's sea scale and the company's continuous expansion in Australia, Africa, America, Southeast Asia and other markets, the international cloud communication business has great potential in the future.

Frequent policy, AI enabling, 5G news to take advantage of the situation. In terms of national policy, in July 2023, the Ministry of Industry and Information Technology issued the Circular on strengthening end-to-end Network Cooperation to assist the Development of 5G message scale, referring to "incremental Terminal support"

And "inventory terminal upgrade" to promote the development of 5G message scale, requiring 5G mobile phones to support 5G messages for new applications for network access permits, and encouraging existing mobile phones to upgrade to support 5G messages. In April 2023, the Ministry of Industry and Information Technology and the Ministry of Culture and Tourism jointly issued the Circular on strengthening the Collaborative and innovative Development of 5G + Smart Tourism, which mentioned that "promoting the integrated development of new services such as 5G new calls, 5G messaging, 5G panoramic live broadcast and smart tourism destination marketing" will promote the expansion of 5G messaging application scenarios. The company seizes the opportunity of rapid development of artificial intelligence to promote the deep integration of AI and cloud communication services. In 2023, Meng.com Technology has reached a cooperation with Huawei Pangu Model to complete the access to ChatGPT 4.0. The company is committed to promoting the combination of big data, Computing, AIGC and cloud communication services, and the value of SMS messages for product upgrades may be greatly increased.

Profit forecast and investment advice: in 23-25, the company's EPS is expected to be 0.26,0.42,0.57 yuan respectively, corresponding to PE is 56 times, 35 times, 25 times, the first time to cover the "hold" rating.

Risk hints: downstream demand is lower than expected, 5G message promotion is not as expected, and other risks.