A leading data service provider for commodities and related industries. The company's main business is divided into industrial data services and steel trading services. In recent years, the company has adhered to the development strategy of rapid expansion of the industrial data service business and steady growth of the trading business. In terms of industrial data services, the company provides a multi-dimensional data system around price fluctuations. It first started in the field of ferrous metals and has extended to the fields of nonferrous metals, energy and chemicals, agricultural products, construction materials, new energy, new materials, and renewable resources. In terms of steel trading services, the company has the top 100 billion B2B e-commerce platform for smart services for steel trading in China, and has built a comprehensive service ecosystem integrating data information, transaction settlement, supply chain products, warehousing and processing, logistics and distribution, and SaaS.

The field of industrial data services has a long history and is widely recognized. The company has been rooted in the commodity data service industry for more than 20 years, covering almost all commodities, serving users across more than 100 industrial chains, and is at the forefront of the world in terms of collection scale, approval and application, and revenue generation. As of the first half of 2023, the company has built 21 major databases, with more than 150 segmented databases, involving more than 8,000 segments. In the first half of 2023, it added more than 90 data sources, 160,000 indicators, and 800 million data volumes, adding an average of 4.5 million pieces of data per day, and building new financial databases, local economic databases, etc. The company has not only signed strategic cooperation agreements with the Shanghai Digital Exchange and Shenzhen Data Exchange in China, but also actively enhances overseas service products, continuously promotes the overseas application of the Mysteel Price Index, and enhances the international influence of the Mysteel brand.

The dual business is operating steadily. The first three quarters of 2023 achieved operating income of 66.547 billion yuan, an increase of 12.77% year on year; realized net profit of 167 million yuan, up 21.04% year on year; realized net profit deducted from mother 119 million yuan, an increase of 3.77% year on year; and the industrial data service business achieved revenue of 598 million yuan, an increase of 19.00% year on year. The Q3 quarter of 2023 achieved operating income of 27.506 billion yuan, an increase of 32.91% year on year; realized net profit of 48 million yuan, up 5.04% year on year; realized net profit after deducted from mother of 31 million yuan, an increase of 2.99% year on year; and the industrial data service business achieved revenue of 202 million yuan, an increase of 1.00% year on year. In terms of steel trading services, the settlement volume of steel spot trading platforms in the first three quarters of 2023 was 46.33 million tons, up 16.56% year on year; the settlement volume for the Q3 quarter of 2023 was 18.6447 million tons, an increase of 10.90% over the previous month.

Data asset entry requirements will be implemented from January 1, 2024. The “Interim Provisions on Accounting Processing Related to Enterprise Data Resources” came into effect on January 1, 2024. The regulations apply to data resources recognized by enterprises as intangible assets or asset classes such as inventory in accordance with the relevant provisions of enterprise accounting standards, as well as data resources lawfully owned or controlled by the enterprise that are expected to bring economic benefits to the enterprise, but are not confirmed as assets because they do not meet the asset confirmation requirements related to the enterprise accounting standards. Adopt future applicable laws to stipulate that expenses related to the production and processing of the company's data products will be included in relevant assets after implementation. We believe that the company's financial reports are expected to benefit from optimization

Empowered by AI, release major models and intelligent assistants for the commodity industry. On December 16, 2023, the company officially released the “Grandmaster of Steel Union” commodity industry standard language model and “Xiaogang” digital intelligent assistant. The company implements the “three-step” industrial model strategic development plan: the first step is to solve the problems of reducing internal costs, increasing efficiency, and increasing volume; the second step is to complete the commercialization of large models and product modeling, so that the industry can use big model technology at low cost; the third step is to go out and empower industry users to customize the big models or small models needed for enterprise development. Currently, the “Xiaogang” digital intelligent assistant is used in three scenarios for trade, analysis and consulting, and content generation in the commodity industry. It has various capabilities such as price data query, industry encyclopedia question and answer, information collation and content summary, knowledge content generation, report interpretation, analysis and prediction, etc., to help industry users complete their daily tasks more efficiently.

Profit forecasting and investment advice. We believe that the industrial data service business is the company's key development and expansion business, and investment is constantly increasing. The company's data capabilities continue to replicate and expand from the black sector to other sectors, and each sector will gradually mature. At the same time, with strong support and encouragement from national industrial policies, there is plenty of room for data element development. We expect the data subscription service business to grow at 18%, 20%, and 22% respectively in 2023-2025. In terms of offline data services, the first half of 2022 was definitely affected by the epidemic. The company reduced the schedule of various types of offline meetings, and the offline related business base was low. It is expected to usher in rapid growth in 2023 and beyond.

We expect the overall growth rate of the industrial data service business to be 26%, 29%, and 30% in 2023-2025, respectively. In terms of steel trading services, the steel industry still has great potential to penetrate the Internet market. The company builds integrated services around the upstream and downstream of the steel industry chain based on transactions. The platform value is recognized by the market, and the business is expected to maintain steady growth. The growth rates are expected to be 9%, 9%, and 9% respectively in 2023-2025. We expect the company's revenue for 2023-2025 to be 83.43 billion yuan, 91,122 billion yuan, and 99.912 billion yuan respectively, with year-on-year increases of 9.0%, 9.2%, and 9.6%; net profit to mother will be 230 million yuan, 332 million yuan, and 403 million yuan respectively, with year-on-year increases of 13.0%, 44.6%, and 21.4%, respectively; EPS will be 0.71 yuan, 1.03 yuan, and 1.25 yuan respectively. Referring to comparable companies, the company was given a dynamic of 35-40 times PE in 2024, with a reasonable value range of 36.05-41.20 yuan. The first coverage gave it an “superior to the market” rating.

Risk warning. Risk of supply, demand and price fluctuations in the steel industry; risk of falling short of the implementation of data factor policies.