Main points of investment:

Announcement: the company released the three-quarter report of 2023, according to the three-quarter report, in the first three quarters of 2023, the company realized revenue of 750 million yuan, yoy-32.02%, realized net profit of-397 million yuan; revenue of the third quarter of 2023 realized revenue of 295 million yuan, and yoy-29.03%, realized net profit of-119 million yuan. The performance was slightly lower than expected.

Income pressure is mainly due to the impact of delayed delivery. According to the three-quarter report, due to the influence of the macro environment, the implementation of the order and the acceptance of the project delivery were delayed. In the first three quarters of 2023, the company achieved revenue of 750 million yuan, yoy-32.02%. The gross profit margin in the first three quarters of 23 years was 48.43%, which was + 0.83pct compared with the same period last year. According to the three-quarter report, the company's gross profit margin increased in the first three quarters compared with the same period last year, and the effect of business restructuring has been shown.

Contract liabilities reflect the resumption of orders. According to three quarterly reports, as of 2023.9.30, the company's contract liabilities totaled 531 million yuan, and yoy+27.42%, 's newly signed orders in the areas of electronic data forensics, digital government and enterprise digitization, and new cyberspace security all exceeded the level of the same period last year, but due to the long implementation cycle of the company's project, revenue recognition was affected, so revenue showed a downward trend.

Cultivate innovative business, increase market investment, and increase sales and management costs. According to the three quarterly reports, the company strengthens the cultivation of innovative business and accelerates the expansion of the market, with a large investment. In the first three quarters of 2023, the company's sales and management expenses were 2.25 yuan and 251 million yuan respectively, an increase of 21.99% and 6.75% over the same period last year, and the sales and management expense rates were 30% and 33.5% respectively.

The net loss in the first three quarters widened compared with the same period last year. On the one hand, the company's revenue has declined under the influence of macroeconomic, on the other hand, the company is still increasing its efforts to expand the market and increase its investment, so the net loss in the first three quarters is larger than that in the same period last year (net loss of 207 million yuan). According to the three-quarter report, the company's net operating cash flow in the first three quarters of 2023 was-322 million yuan, compared with-572 million yuan in the same period last year. It is mainly due to the decrease in the purchase payment and employee salary paid by the company in this period compared with the same period last year.

"Sky Rock" large model all-in-one machine released, going out to sea with initial results. According to the three-quarter report, the company uses the Meiya "Sky Rock" public safety model as the AI platform and foundation, and released the Meiya "Sky Rock" public safety model all-in-one machine, the release of artificial intelligence content detection platform, "AI-3300 discerning Video Image Verification Workstation" V1.3 version, etc., enabling AI to generate content identification, detection and monitoring, while the company helps build countries along the "Belt and Road Initiative" and exports technical training. The sea business has achieved certain results.

Maintain a "buy" rating. The company's AI-related products have been put into the market, and the newly signed orders have rebounded from the same period last year. According to the three quarterly reports, the company Q4 will take the comprehensive budget as the starting point, improve the per capita efficiency as the goal, improve the delivery capacity, and speed up the acceptance speed of the project.

And from a historical point of view, Q4 is the most important source of profit for the company. Therefore, we maintain the profit forecast and estimate that the income from 2023 to 2025 will be 2.844 billion yuan, 3.347 billion yuan and 3.94 billion yuan, and the net profit will be 3.03 yuan, 3.82 yuan and 469 million yuan.

Maintain a "buy" rating.

Risk hint: AIGC regulatory product expansion is not as expected; competition in the data security industry intensifies.