Investment events: The company released the three-quarter report for 2023: (1) The company's revenue for the first three quarters reached 803 million yuan, a year-on-year increase of 21.71%, net profit of 114 million yuan, a year-on-year decrease of 8.69%, a year-on-year decrease of 8.69%, non-return net profit of 102 million yuan, a year-on-year decrease of 11.71%; (2) the company's revenue in the third quarter was 285 million yuan, a year-on-year decrease of 19.95%, net profit of 29 million yuan, a year-on-year decrease of 40.26%.

Revenue showed good growth, and new orders achieved steady growth. During the reporting period, the company's revenue growth in segments such as health insurance, human resources, and provident funds was good, driving the company's overall revenue to maintain high growth. In the first three quarters of 2023, the company's revenue reached 803 million yuan, an increase of 21.71% over the previous year. Furthermore, the company has achieved steady growth in new orders, and the company has sufficient orders in hand, laying a solid foundation for continued growth in performance. However, due to the impact of factors such as macroeconomic fluctuations, the company's project acceptance and sales repayment cycles have declined, and project implementation costs have increased markedly, leading to a decrease in the company's gross margin, and has also had a negative impact on net profit growth.

The company and Huakun Zhenyu jointly established the Innovation Laboratory to jointly promote the development of the ICT business. Recently, the company signed a strategic cooperation agreement with Huakun Zhenyu, and the two sides jointly established the “Huakun-Yinhai Innovation Joint Laboratory” to jointly create leading industry solutions based on Kunpeng+Shengteng's complete machine products. The company has strong competitiveness in segments such as human resources, health insurance, smart cities, civil affairs, and housing finance. Cooperation between the two sides will help the company develop market segments in related fields. Strong alliances are expected to push the company's business into a new stage of development.

The data element business is advancing at an accelerated pace, and the results have been fruitful. During the reporting period, the company actively carried out capitalization, commercialization and service innovation of data elements to promote the development of the company's data element business. At present, the company has become a data provider on the Shenzhen Data Exchange, and the data element product “Hospital Disease Diagnosis Path Knowledge Base and Medical Expense Analysis System” launched by the company has been listed on the Guangzhou Data Exchange. In September 2023, the company and its wholly-owned subsidiary Guizhou Jiuyuan Yinhai passed the qualification review of the Guiyang Big Data Exchange and officially became the data provider of the Guiyang Big Data Exchange. The company's data element business has been very successful, and the business is progressing at an accelerated pace.

Investment suggestions: We expect the company's revenue in 2023/2024/2025 to be 16.13/19.60/2,366 billion yuan, net profit of 2.50/3.10/380 million yuan, and corresponding PE of 38.9/31.3/25.6 times respectively. Considering the growth of the company's business and the new development opportunities brought by the data element business, we gave the company a “buy” rating.

Risk warning: business development falls short of expectations, policy implementation is slow