Q1-Q3 deducts non-net profit increases significantly, maintaining "buy" rating

The company's 23-year Q1-Q3 realized revenue of 6.263 billion yuan (yoy+12.56%), net profit of 135 million yuan (yoy+4.71%) and non-net profit of 41.72 million yuan (yoy+323.57%). Among them, Q3 realized revenue of 2.373 billion yuan (yoy+8.79%,qoq+6.23%) and net profit of 39.7 million yuan (yoy-13.08%,qoq-55.90%). Taking into account the slow recovery of downstream demand, the reduction of income growth and the forecast of Zhiqi gross profit margin, the company's 23-25 net profit is expected to be 2.87 billion RMB 4.32 billion RMB 546 million (the previous value is 369pm 528 RMB 648 million). Using the segment valuation method, the net profit of 24e intelligent car business is 215 million yuan, and the net profit of other businesses is 218 million yuan. With reference to the average 24PE of comparable companies, intelligent vehicles / other businesses are respectively given 32.8x/28.1x 24PE with a target price of 10.87 yuan (the previous value is 12.84 yuan) to maintain "buy".

The effect of cost control is good, and Zhiqi and medical business are advancing steadily.

The company's gross profit margin in the first three quarters was 28.87%, down 1.63pct from the same period last year, mainly affected by the decline in gross profit margin of the smart car connected business. The company's cost control effect has achieved initial results. In the first three quarters, the sales / management / R & D rates were 5.83%, 7.26% and 10.90% respectively, down 0.64%, 0.53% and 0.34pct respectively compared with the same period last year.

The company's core businesses, such as smart car interconnection, health care and social security, continue to make steady progress. 1) Intelligent vehicles: TOP10 suppliers in four areas including cockpit domain controller, intelligent cockpit software namely system, on-board 5G/V2X module and system, and vehicle intelligent middleware selected by the company. 2) Medical IT: in the first three quarters, the company helped 16 hospital customers to pass the high-level (level 5 and above) evaluation of the functional application level of the national electronic medical record system, and the cumulative number reached 51 leading positions in the home industry.

Health insurance data elements accelerate, the company is expected to continue to benefit

In June 2023, National Healthcare Security Administration issued the Agreement on promoting Information sharing between Commercial Health Insurance Information platform and National Medical Insurance Information platform (draft for soliciting opinions), defining the top-level design of medical insurance and commercial insurance information sharing; in July 2023, Shanghai officially launched a substantive exploration of medical insurance and commercial insurance information sharing. We believe that with the orderly progress of national policies and local pilot projects, the market for medical insurance data elements is expected to accelerate improvement. As a participant in 24 provincial health insurance platforms across the country, the company has deeply participated in the health insurance data governance work of the national platform and many provinces and cities such as Hainan, Inner Mongolia, Suzhou and Nantong, and is expected to continue to benefit from the health insurance data factor market. to help bring the value of health insurance data elements into full play.

Strengthen the layout of AI+ medical products, and there is room for long-term growth.

The company actively carries out the strategic layout of AI to strengthen the advantage integration of artificial intelligence and traditional business. In the medical field, this year, the company launched three major "AI+ medical" products, such as the large model of the medical field, the flying standard medical image marking platform 4.0, and the virtual endoscope based on WEB. In August 2023, the company established Neusoft Magic Science and Technology Research Institute, which aims to continuously explore the innovation and application of artificial intelligence technology and promote the implementation of large language model system engineering strategy. We believe that the company's artificial intelligence ecology is expected to accelerate improvement, the traditional core business is expected to achieve full integration with AI technology, and the company has a broad space for long-term growth.

Risk hint: the progress of the smart driving industry is not as expected; the business drag of subsidiaries is more than expected.