Revenue & Profit Side - Revenue profit is in line with expectations. As a leader in ERP Xinchuang and factory-side intelligent manufacturing, the company has certain procyclical attributes. In 2023, industrial enterprises above the national scale achieved operating income of 133.44 trillion yuan, an increase of 1.1% over the previous year; the total realized profit was 76,858.3 billion yuan, a decrease of 2.3% over the previous year. As a core participant in discrete industrial intelligent manufacturing, the company achieved high alpha returns. Revenue:

The full year of 2023 is expected to achieve revenue of 23.8-2.61 billion yuan, yoy +5.0% to 15.0% (median YOY +10.0%). 2023Q4 is expected to achieve revenue of 70~9.3 billion yuan, yoy +16.0% ~ 53.5% (median yoy +34.8%).

Net profit to mother: Net profit due to mother for the full year of 2023 is estimated to be between 260 and 30 million yuan, yoy +4.2% ~ 20.3% (median yoy +12.3%). 2023Q4 is expected to achieve net profit of 130 to 170 million yuan, yoy +35.9% to 77.2% (median yoy +56.6%); net profit deducted from non-return to mother is expected to be 2.3 to 270 million yuan for the full year of 2023, yoy +0.6% to 18.4% (median yoy +9.5%).

2023Q4 achieved net profit of 120 to 160 million yuan after deduction, yoy +36.5% to 83.2%. The estimated impact of non-recurring profit and loss on net profit is $33.97 million.

Business highlights from 24 years - central and state-owned enterprise credit innovation, implementation of AI B-side applications, and acceleration of the market pattern. The core target of the Huawei chain benefits from Meta ERP promotion opportunities and is expected to open up the middle and high-end markets for central state-owned enterprise customers. The AIGC manufacturing model was launched as an important scenario for implementing the B-side of the AI application, reducing internal costs and increasing efficiency, and improving product competitiveness externally. Market clearance is expected to accelerate the company's active attack during the recent downturn in prosperity, which is conducive to market clearance driving pattern optimization.

Pessimism may have been released, and valuations have been at an all-time low for 3 years. The company's 20-year average of 27 X PE; 21-year 35 X PE average; 22-year 41 X PE average; recently, the company's lowest point valuation has been at the bottom of its history in three years. It is expected that the downstream economy is expected to recover upward, domestic ERP innovation will continue to progress, and the AI industry application side is expected to gradually enter a cash out period.

We adjusted the company's revenue for 23-25 to be 2,49/31.32 billion yuan respectively, net profit to mother was 278/3.59/445 million yuan, and EPS was 0.68/0.88/1.08 yuan, respectively. The current price of the company's stock corresponds to a PE valuation of 23.8/18.5/14.9 times, maintaining a “buy” rating.

Risk warning

Risk of fluctuations in IT expenditure for core customers; risk of downstream industry and customer sentiment recovery falling short of expectations; risk of increased industry competition; risk that convertible debt-to-stock prices are higher than market prices and cannot be converted into shares.