Investment event: On August 28, the company released its 2023 semi-annual report. 2023H1 achieved operating income of 939 million yuan, an increase of 4.58% over the previous year; net profit of 23 million yuan, a year-on-year decrease of 17.04%; net profit of non-return net profit of 0.

2.1 billion yuan, an increase of 32.93% over the previous year.

The credit sector has developed by leaps and bounds, and overseas markets have achieved new breakthroughs. 2023H1 achieved operating income of 939 million yuan, an increase of 4.58% over the previous year; net profit attributable to the parent was 23 million yuan, a year-on-year decrease of 17.04%; net profit attributable to shareholders of listed companies after deducting share payments, interest accrued on convertible bonds, and non-recurring profit and loss was 52.1974 million yuan, an increase of 38.79% over the previous year. On the business side, the company's credit products developed by leaps and bounds during the reporting period, receiving 3 large-scale credit projects of over 10 million in a row, 1 inclusive credit project of nearly 10 million, and a new project contract amount of over 100 million in the first half of the year. In the credit card sector, the company's market share continued to rise. Once again, it completed full customer switching of a national joint-stock bank's credit card core authorization quota system, pioneering the deployment of large-scale core applications on the bank's self-developed distributed microservice architecture platform, and a container cloud platform supported by the Xinchuang server. At the same time, it once again won a bid for the construction of a next-generation credit card core system for a major state-owned bank. In the overseas market, CreditX MeRUV2.0, a core product independently developed by the company, entered overseas markets, helping a Southeast Asian bank complete Visa and financial supervision tests within 3 months, and achieve a breakthrough in the field of overseas product cooperation.

Net cash flow increased sharply year over year, and great emphasis was placed on R&D investment. Through multi-level coordination between the company, business groups and business departments, and paying close attention to project delivery and contract repayment, the company's cash flow improved dramatically. 2023H1's net operating cash flow was 84 million yuan, an increase of 79.85% over the previous year. In terms of R&D, the company invested 132 million yuan in R&D in 2023H1, accounting for 14.10% of revenue. In 2023, the company initiated R&D investment in the “Financial Industry Cloud Service Solution Upgrade Project” and the “Digital Finance Application R&D Project”. These two major projects mainly focus on the field of cloud computing and digital business.

At the same time, the company closely followed market trends, began research and development of innovative products such as “Exploring the Easy Intelligent Computing Data Element Map” and the “Exploring Internal and External Data Integration Bazaar”, and also established a collaborative R&D model with various ecosystem partners.

Expand the strategic layout, and the company's growth advantages will gradually be highlighted. The company and Nanjing Herun Zhicheng Private Equity Fund Management Co., Ltd., Beijing Capital Online Technology Co., Ltd., Beijing Anrun Time Consulting Co., Ltd., and Guoneng Rixin Technology Co., Ltd. jointly established the Nanjing Herun Mathematics Venture Capital Partnership (Limited Partnership). The company subscribed to Herun Fund for 40 million yuan with its own funds. By participating in the establishment of an industrial investment fund, the company can deepen cooperation with partners in the field of cloud computing and expand the company's strategic layout in related industrial chains. At the same time, the company's fintech products focus on the bank's key business areas and key innovation links. According to the report of CDI Consultants, the company ranked fourth in overall market competition, with credit card solutions ranking first for four consecutive years, which lays a solid foundation for the company's continued development.

Investment suggestions: Considering the impact of the macroeconomy, some banks' investment in fintech has slowed down. We have revised our profit forecasts to predict that the company's revenue for 2023-2025 will be 22.98/26.92/3.168 billion yuan respectively (the original forecast value for 2023-2025 was 2,389/2876/3.439 billion yuan), and the net profit for the return mother was 1.29/179/2441 million yuan respectively (the original forecast value for 2023-2025 was 186/242/310 billion yuan), corresponding PE 46/33/25 times, maintaining the “buy” rating.

Risk warning events: business development falls short of expectations, slow policy progress, etc.