Digital operation business volume, short-term pressure fluctuations in new energy demand: the company's revenue grew rapidly, achieving revenue of 1,775 billion yuan in the first three quarters of 2023, an increase of 32.22% over the previous year, of which the digital application business grew steadily, achieving revenue of 775 million yuan, an increase of 11.94% over the previous year; the digital product business achieved revenue of 157 million yuan, a year-on-year decrease of 59.56%, mainly affected by fluctuations in sales of major customer Chery's new energy vehicles; the digital operation business achieved revenue of 843 million yuan, an increase of 222.45% over the previous year, mainly benefiting from the number The volume of smart ETC business and digital logistics supply chain business. Due to changes in business structure, the company's gross margin decreased. The gross margin for the first three quarters was 26.09%, down 6.50 percentage points from the same period last year. Fluctuations in the NEV market are expected to be a short-term phenomenon, and the company's revenue from digital products in the energy storage sector is expected to be initially released next year. Subsequent related revenue and gross margin repairs are worth looking forward to.

Good cost control leaves room for subsequent performance release: the company strictly controlled cost growth in 2023. The company incurred sales expenses of 111 million yuan in the first three quarters, an increase of 1.57% over the previous year; management expenses of 106 million yuan, an increase of 0.69% over the previous year; R&D expenses of 210 million yuan, an increase of 3.19% over the previous year; and financial expenses of 018 million yuan, an increase of 5.39% over the previous year. The sum of the main expenses in the first three quarters was reduced by 7.36 percentage points compared to the same period last year, leaving room for future profit margin increases.

It is proposed to issue additional codes to develop data intelligence and build new energy business production capacity: The company plans to issue a fixed increase of 81 million yuan, mainly for data intelligence platform upgrades and industrialization projects, smart energy storage BMS and system industrialization projects. Among them, the main R&D projects for data intelligence platform upgrades include data exchange platforms, AI platforms, knowledge calculation platforms, etc., and are applied to downstream scenarios to improve service capabilities; smart energy storage industrialization projects mainly build production and assembly lines for core components such as energy storage BMS/BEMS, and centralized/distributed energy storage system assembly test lines, forming a production capacity of about 0.96 GWh of energy storage systems and core energy storage components per year.

Investment advice: Take a positive view of the scale and gross margin improvements of the company's digital product business in 2024. The company is expected to achieve operating income of 31.97, 43.17, and 5.312 billion yuan in 2023-2025, respectively, and net profit of 0.92, 1.87, and 305 million yuan, corresponding to EPS of 0.33, 0.67, and 1.09 yuan, respectively. Maintain a “buy” rating.

Risk warning: Product development falls short of expectations, downstream demand expansion falls short of expectations, and market competition intensifies.