The company is a leading company in the field of digital transformation of domestic enterprises, with three major lines of business: collaborative office, cloud and big data, and intelligent channels. At present, the company's products are independent and controllable, mailbox products and cloud operation and maintenance services fully benefit from industry opportunities, and maintain in-depth cooperation with China Mobile Limited and other downstream manufacturers for a long time. In the future, according to the company announcement, we plan to combine AI technology with our three major product lines to create innovative products such as Xinchuang AI mailbox, intelligent cloud disk, 5G message, metasonic virtual digital human, etc., to form an industry demonstration application, and the growth space is worth looking forward to.

We maintain the "overweight" rating.

Matters: the company released its three-quarter report in 2023, with revenue of 1.093 billion yuan in the first three quarters, an increase of 24.62% over the same period last year, a net profit of 307 million yuan, an increase of 91.72%, and a non-return net profit of 183 million yuan, an increase of 29.39% over the same period last year.

Q3 performance is in line with expectations, and R & D investment has maintained high growth. 2022Q1-Q3, the company achieved revenue of 3.84 million yuan, an increase of 42.58%, 10.22% and 23.73% respectively over the same period last year, and a marginal improvement in Q3 revenue growth. From a business-by-business point of view, combined with the company's semi-annual report data, we believe that the company's cloud and big data product line and collaborative office product line are growing rapidly, driving the company's revenue to achieve rapid growth. In terms of expenses, the company's sales / management / R & D expenses in the first three quarters were RMB 0.32 million, an increase of 7.04%, 16.76% and 23.20% respectively over the same period last year. The company's overall cost control is good, and it continues to increase investment in research and development, focusing on AI, 5G, Metasmology and other areas to provide growth impetus for future performance. In terms of cash flow, 23Q3 achieved a net cash flow of 70 million yuan, an increase of 70% over the same period last year, and cash flow continued to improve.

Focus on building AI smart mailbox, Q4 products are expected to gradually hit the ground. The company has been engaged in the e-mail field for more than ten years, and the current mail system product RichMail has been upgraded to v6.0, serving hundreds of large corporate customers and nearly 1 billion C-end individual users. With the development of AIGC, enterprise mailbox products as one of the high-quality scenarios of AIGC applications, the company also released the next generation of intelligent mailbox demo in May, which will develop three core product capabilities: the active service capability of class secretaries, information integration processing capabilities based on large models, and cross-domain information acquisition and storage capabilities. The product is expected to be tested in Q4. In addition, according to the 2023 China Mobile Limited Global Partnership Conference on October 12, the company is deeply involved in the building of China Mobile Limited AI cloud disk, AI mailbox and other products. In the future, the company's collaborative office product line will further enhance the level of automation and move towards the stage of intelligent development.

Enterprise digitalization experts, relying on operators to power the national asset cloud and 5G digital people related services. In recent years, the three major telecom operators have made efforts in state-owned cloud construction, and the company has earlier laid out the research and development of cloud platform system. Provide construction, operation and maintenance services, including cloud supporting services, cloud platform construction, cloud migration, cloud operation and maintenance services, as well as cloud pre-sales, channel construction and other promotion services, to facilitate the digital transformation of enterprises, and will benefit from the wave of cloud demand growth of operators in the future. At the same time, the company is currently in deep cooperation with mobile customers to jointly develop a number of meta-universe-related services such as digital IP, augmented reality travel, video ringtone, digital human call secretary, etc. At the 2023 China Mobile Limited Global Partnership Conference, the company and China Mobile Limited launched a 5G video secretary service product based on AI technology. The 5G video secretary can interact with the caller in natural language in the form of a virtual human, ask the caller's intention like a real person, and inform the owner himself in the form of SMS + WeChat Mini Programs, so that everyone can have a portable intelligent secretary.

Risk factors: intensified competition in the industry market; R & D progress is not as expected; brain drain risk; accounts receivable and contract asset balance is large risk; downstream demand is lower than expected.

Profit forecast, valuation and rating: under the protection of the favorable policy of Xinchuang, the company, as a domestic leader in Xinchuang mailbox, is expected to further open the growth space by combining large models to build AI mailboxes. At the same time, relying on the background of close cooperation with operator customers for many years, the company has further developed operators' state-owned cloud operation and maintenance services, and actively participated in the research and development of innovative services such as 5G messages and several Homo sapiens call secretaries, and its performance is expected to achieve rapid growth in the future. We maintain the company's 2023-2025 net profit forecast of 3.47 billion yuan, corresponding to the EPS of 0.78, 0.90 and 1.11 yuan. With reference to the comparable company's pan-micronetwork and Zhiyuan Interconnection's average 2024 valuation of 30X (Wind consensus expectations), we give the company 2024 30X PE, corresponding to the target market capitalization of 12 billion yuan, maintain the target price of 27 yuan, and maintain the "overweight" rating.