Core business quality and volume have been reduced, and losses have been drastically reduced
The company announced the interim results announcement for the period ending September 30, 2023. The company's revenue for the six months ended September 30, 2023 fell 24.9% year on year, mainly because the company was more focused on its core business, and the overall gross margin increased sharply by 12.1 pct to 38.2% year on year. The company's losses were drastically reduced. Losses for the period fell to 80 million yuan, a year-on-year decrease of 77.7%; adjusted net losses also decreased significantly to 54 million yuan, a year-on-year decrease of 75.9%. The company's strategy focusing on core business and core customers has seen initial results. Big data platform and solution revenue was 128 million yuan, up 3.2% year on year; total number of top hospital customers increased 6 to 94 compared to FY23; life science solution revenue was 170 million yuan, up 16.1% year on year, gross margin increased sharply by 13.3 pct, revenue retention rate of the top ten customers reached 128.2%; health management platform and solution revenue was 58 million yuan, a sharp contraction of 71.4%. Focus on the product portfolio, gross margin increased 28.1 percent year over year PCT reached 53.2%.
The big model enters the training stage, and yiduCore 2.0 sets sail
According to the company's official website, at the Huawei Full Connectivity Conference on September 21, 2023, Yidu Technology and Shengteng AI launched a large-scale model training all-in-one solution. It is specially designed for medical institutions and government supervisory authorities, and integrates various functions such as data processing, model training, fine-tuning, scenario evaluation, and external knowledge databases. Relying on YiduCore's deep accumulation of medical knowledge, knowledge maps, and high-quality medical data processing capabilities, Yidu Technology continues to develop and train large language models for medical professionals based on 100 billion levels of refined training tokens. According to the company's announcement, the company has completed the training of 7 billion and 13 billion parameter models, and is currently training on the 70 billion parameter model. At the same time, yiDucore has also iterated to version 2.0. Based on the large medical domain model, semantic understanding is more accurate and reasoning ability is stronger. It is expected that it will deeply empower existing products and business lines, further deepening product barriers.
New projects are progressing steadily, and long-term growth is full of momentum
According to the company's announcement, the digital therapy products for diabetes developed independently by the company during the reporting period have passed both approval by the US Food and Drug Administration and the Hainan Drug Administration. According to Sina Finance, up to FY24H1, the amount of orders in hand by FY24H1 reached 872 million yuan, a surge of 58% over the previous year. At the same time, on-hand orders of over 100 million yuan have already been delivered. Since October, the company has successively disclosed that it has won the bid for the Peking University Cancer Hospital Inner Mongolia Hospital regional medical data center construction project and the Wenzhou Central Hospital platform project. The total project amounts are 842 million yuan and 696 million yuan respectively. The company has sufficient reserves of large orders, superimposed product innovation and large-scale model technology are progressing steadily, and the company is full of momentum for long-term growth.
Investment advice
The medical informatization policy supports strong certainty. At the same time, as a pioneer in the medical intelligence industry, the company is fully competitive in the application of AI in the medical domain due to the accumulation of scarce medical data in the industry. Due to the company's optimization of core business and increased profitability, we lowered the FY24-25 revenue forecast to 88/1.12 billion yuan (previous value of 10.2/1.33 billion yuan), increased the FY26 forecast by 15.01 billion yuan, raised the FY24-25 net profit forecast to -0.7/0.1 billion yuan (previous value - 2.5/-1.0 billion yuan), and increased the FY26 forecast by 110 million yuan, and FY24-FY26 earnings per share - 0.07/0.01/0.11 yuan, corresponding to 2023 The closing price on November 30 was HK$4.89 (HKD/RMB 0.9075:1), and PB was 1.17/1.16/1.13X respectively, maintaining the “increased holdings” rating.
Risk warning
Data security regulatory risks; increased industry competition; risk of loss of major customers.