Revenue was under pressure, and losses in joint ventures and joint ventures led to a year-on-year decline in profits. In 2023, H1 achieved revenue of 6.68 billion yuan (YoY -7.9%), gross profit of 1.11 billion yuan (YoY -13.8%), and a gross profit margin of 16.6% (-1.1 pcts year on year). In terms of cost rate, the total operating expenses of H1 company in 2023 were 990 million yuan (YoY -14.3%), and the total operating expenses ratio was 14.8% (year-on-year -1.1 pcts), of which the sales expense ratio was 5.6% (year-on-year +0.3 pcts); and the administrative expenses rate was 2.3% (+0.1 pcts). Affected by losses from investing in Huicong and its subsidiaries (192 million), H1 achieved net profit of 0.4 billion yuan (YoY -78.8%) and a net return interest rate of 0.6% (-2.0pcts year on year) in 2023.
Traditional businesses such as software operations have shrunk, and business structures have been concentrated on big data. 2023 H1 big data products and solutions revenue was RMB 1.09 billion, accounting for 16.4%, up 2.9 pcts year on year; software and operation service revenue was RMB 2.17 billion, accounting for 32.5%, up 1.3 pcts year on year; and revenue from innovation and traditional services was RMB 3.41 billion, accounting for 51.1%, down 4.2 pcts year on year.
Deepen the development of the big data business, and have plenty of orders in hand. The company's 2023H1 big data business signed a new contract of 970 million yuan, an increase of 55% over the previous year; it has signed an unsold contract of 2.103 billion yuan, an increase of 36% over the previous year, laying the foundation for performance growth in the second half of the year. As big data industry policies continue to improve and data element market construction continues to deepen, the company is seizing the window of opportunity. The company's big data products and solutions achieved gross profit of 390 million yuan (YoY +2.9%), accounting for 34.7% of total gross profit (+5.6 pcts), and gross margin of 35.3% (year-on-year -3.1 pcts).
Actively build a digital smart city and won the bid for the Changchun Intelligent Computing Center. In the digital intelligence supply chain scenario, the company focuses on advantageous industries such as IT, 3C, and FMCG, and continues to provide end-to-end one-stop supply chain operation services for major customers such as China Mobile, China Unicom, Huawei, Honor, Dell, and Yishang Yujie; accelerates the expansion of the green dual-carbon industry and the NEV related industrial ecosystem; once again, it has won the bid for hundreds of millions of yuan of supply chain service orders from BYD, and cooperated with leading enterprises such as FAW, Geely, Tesla, and Ningde Times. During the quarter, the company fully participated in the “Digital Jilin” construction, won the bid and signed contracts for the Changchun Intelligent Computing Center and the Changchun Yitong River Smart Water Project, with a total amount exceeding 250 million yuan.
Investment advice: Benefiting from the company's focus on big data strategy and rapid growth in the big data business, the company's revenue for 2023-2025 is expected to be 187.77/199.25/21.276 billion yuan, and net profit to the parent is 507/668/757 million yuan, maintaining the “buy” rating.
Risk warning: Big data business development falls short of expectations; customer development falls short of expectations; competition intensifies