Event: on October 25, the company released its results report for the third quarter of 2023: in the first three quarters of 2023, the company achieved operating income of 3.33 billion yuan, an increase of 34.19% over the same period last year, and a net profit of 5.14 million yuan, down 72.58% from the same period last year. Non-net profit was deducted from-35.45 million yuan, down 484.83% from the same period last year.

Comments:

Demand fluctuations, policy adjustments and business strategy changes affect short-term performance. 23Q3 achieved revenue of 966 million yuan, up 17.82% from the same period last year; realized return profit of-35.06 million yuan, down 349% from the same period last year; realized non-net profit of-42.17 million yuan, down 729% from the same period last year, mainly as follows: 1) under the influence of macroeconomic trends and current policies, the volume of cloud SMS, especially service SMS, declined year-on-year. 2) in order to successfully complete the recruitment of 5G letter reading, the company takes the initiative to control the relevant traffic, and the business volume is reduced, and the subsequent related traffic will be sent by 5G letter reading.

The performance of new services such as 5G rich media news and international cloud communications is outstanding. 1) 5G rich media message service:

Revenue in the first three quarters of 2023 increased by 97.64% compared with the same period last year. 2) International cloud communications business: revenue increased by 241.64% in the first three quarters of 2023 compared with the same period last year. China Mobile opened the analytical bidding of 5G reading terminal + the Ministry of Industry and Information Technology issued the "notice on strengthening end-network collaboration to assist the development of 5G message scale" + 5G industry-end bidding constantly, 5G short messages ushered in the inflection point, the industry is expected to accelerate penetration.

With the natural integration of GPT and 5G messages, the time for the company's qualitative change has come. Chatbot uses voice recognition, semantic analysis and other technologies to respond to users at any time and provide message services such as sending, receiving, parsing, processing and so on. It is a new human-computer interaction service mode with a higher degree of integration and can replace App. RCS message aggregates merchants using Chatbot platform, satisfies the communication between merchants and customers through RCS message channel, and provides intelligent personalized services for users according to chat scenarios. Chatbot creates a new entry for message service, so that users can complete one-stop business experience such as service search, discovery, interaction, payment and so on in the message window. The essence of 5G message is to quickly promote the capabilities and products of the enterprise, and have the carding and understanding of the relevant enterprise data from the bottom. According to the 2022 annual report of Meng.com Technology, the company has completed the market layout of emerging important industries and customers, such as finance, Internet, government and public utilities, and consumer goods. Chatbot, the core product that naturally acts as a "data bridge", is complementary to GPT on the interactive level, and is expected to form a strong combination in the subsequent evolution to the dedicated field, which will lead to a qualitative reevaluation of 5G message logic.

Investment suggestion: the commercialization of 5G news continues to advance, and the volume of business maintains a trend of rapid growth, which leads to the growth of the company's income and the optimization of its income structure. ChatGPT refactoring 5G messages is expected to bring about a qualitative change in business logic refactoring. It is estimated that the company's net profit from 2023 to 2025 will be 2.24,3.39 and 455 million yuan, corresponding to PE of 51x, 33x and 25x respectively, maintaining the "recommended" rating.

Risk hint: the mature rhythm of GPT technology is lower than expected; the rhythm of product integration is lower than expected.