The performance was in line with expectations and the change in income structure led to short-term fluctuations in gross profit margin. In the first three quarters of 2023, the company had operating income of 5.744 billion (YoY+20.10%), net profit of 753 million (YoY+ 12.77%), non-return net profit of 666 million (YoY+11.77%), and single 2023Q3 operating income of 2.107 billion (YoY+24.80%) and net profit of 279 million (YoY+9.49%). The overall performance was in line with expectations. The company's gross profit margin for the first three quarters of 2023 was 37.77% (YoY-2.98pct,QoQ-1.90pct), with a slight decline. It is mainly due to the decline in the price of newly signed contracts in some digital businesses, and the intensification of recruitment competition in some business areas, and the pressure on the demand for some cash products. However, with the continuous deepening and expansion of the digital transformation business in the areas of smart government, smart transportation and smart convenience in the future, the company's profitability will also be steadily improved.

Recently, a number of tenders have been launched, and various businesses have developed steadily. The company recently announced a number of bid-winning information, among which, in terms of financial digitization, the company won the bid for a new generation of offline channel system construction project of Sichuan Bank, realizing the unified management of major channels such as ATM/CRS, STM, mobile exhibition, queuing system and return order system of Sichuan Bank. At the same time, the company also won the bid for the upgraded version of the self-service ATM project of China Construction Bank, the intelligent operation project of China Minsheng Banking Corp's new network, and the "one-stop" self-service project of Guangzhou Agricultural and Merchant Bank's intelligent network construction project. a series of "teller management" cash, passbooks and other business into "self-help management", greatly improve the management experience and efficiency. In terms of digital city, the company won the bid for the intelligent city construction project in Conghua District of Guangzhou City, with a value of 447 million. This project will be through the company's independent research and development of aiCore System digital technology base and "Wangdao" industry model, so as to enhance the scientific, refined and intelligent level of urban governance.

The National data Bureau officially unveiled, looking forward to the outbreak of public data services. The State data Administration officially unveiled on the morning of October 25, 2023, and the policy-making process in basic areas such as public data operation, data confirmation registration and data transactions may be accelerated. In recent years, in the field of data elements, relying on big data base and AI base, we have created a series of data element circulation products and programs, such as data sharing and exchange platform, data center, financial data application products, data security governance and so on. Participate in the establishment of the data Exchange, become the third largest shareholder of the Guangzhou data Exchange, promote the circulation and integration of data elements, and realize the great-leap-forward development of data elements from scratch. The company is one of the few enterprises in the market that can provide products covering almost the whole industrial chain of data elements, focusing on the accuracy of enterprise data and public data, or will enjoy the first wave of dividends promoted by the policies of the National data Bureau.

Profit forecast: it is estimated that the company's operating income from 2023 to 2025 will be 85.96pm 97.81max RMB 11,081 million, respectively, and the net profit of its parent will be 10.04pm 1200max RMB 1.410 billion respectively, maintaining the "buy" rating.

Risk tips: the development of the data factor industry is not as expected, macroeconomic growth is not as expected, overseas business expansion is not as expected, valuation models and profit forecasts are not as expected.