The company's revenue has maintained steady growth, with software products and technical services accounting for more than 80%. Revenue in 2022 was 373 million yuan, up 12.62% year on year; net profit to mother - 271 million yuan, down 10.90% year on year.
Revenue for the first three quarters of 2023 was 223 million yuan, up 30.05% year on year; net profit to mother was 269 million yuan, down 19.15% year on year. Looking at the 2022 annual report data by product, revenue from software products and technical services was 298 million yuan, accounting for 80.03%, up 16.29% year on year; applications and solutions were 61 million yuan, accounting for 16.41%, up 12.29% year on year; software and hardware integrated products and services amounted to 13 million yuan, accounting for 3.56%, down 33.58% year on year. By region, East China, North China, and South China accounted for the top three, with ratios of 37.97%, 31.07%, and 12.94%, respectively, for a total of 81.98%.
Follow industry trends and create multi-modal, intelligent, agile and popularized products.
For the big data and cloud-based platform product line: ① The company released TDH9.3, a data platform that can meet offline/real-time access to data lakes, complex data warehouse processing, and data market analysis requirements; ② TDH9.3 newly released vector model storage, supports unified storage and management of 11 types of model data, and supports the use of unified query processing language to complete cross-model data flow and correlation analysis; ③ cloud-native distributed vector database Transwarp Hippo supports storing, indexing and managing massive vector data sets; ④ The data cloud platform TDC launched version 3.2, which supports TDH upgrades to TDC.
Product line for big data development and intelligent analysis tools: ① Navier3.1, a data element circulation product, makes data circulation more convenient, secure, and controllable. Among them, the transaction portal Datamall creates a data asset catalog platform; ② a secure sandbox sandbox creates a closed and isolated data development and analysis environment, where developers analyze and calculate in a safe and isolated environment; ③ the privacy computing platform Sophon P C 2 2.0 ensures that data is usable and invisible in all aspects; ④ Data security protection tools Defensor 4.0 introduces large models to solve the problem of low semantic contextual recognition rate of short texts in classification hierarchy; ⑤ Sophon LLMOps, a large model training tool, helps enterprise users build future applications based on large models.
For the distributed relational database product line: ① The distributed analytical database ArgoDB 6.0 further enhances real-time analysis capabilities and builds a safe and efficient localized multi-mode engine that can replace foreign products such as Oracle, DB2, Teradata, and SAPHANA in scenarios such as batch processing and OLAP and Adhoc analysis; ② The distributed transactional database KundB3.2 can replace Oracle/DB2/MySQL in transactional OLTP business scenarios, highly concurrent online data service scenarios, etc.
Advances in AI: ① The AI big model industry chain is divided into 6 layers: basic computing power, big data analysis base, general big model, development tools, field big model, and efficiency tools. In addition to basic computing power and general big models, the company has a layout, including distributed vector database Hippo, large model operation management software Sophon LLMOps, Wugai Big Model, Big Model Search Big Model, Big Model Coding Assistant, Business Insight Analysis Assistant, Supervisor Data Management Assistant, etc. ② The generative big language model “endlessly” targets the financial industry, achieving a complete link from event understanding to event propagation to factor calculation to strategy generation; in the field of big data, “searching” big models allows non-professional users to freely query data as needed through natural language without learning or mastering database programming languages. ③ We have developed Sophon LLMOps, an operation and maintenance platform that supports large model operation and maintenance (LLMOPs).
Cultivate both internally and externally, improve ecological construction externally, and improve the talent system internally.
The company has detailed the company's partner architecture system, formulated different cooperation strategies and methods based on different types of partners (such as industry ISVs, CPU vendors, hardware vendors, operating system/cloud and general software vendors, regional distributors, etc.), and successfully developed dozens of ISVs and regional distributors in the financial, education, transportation, medical, energy, government and other industries, and made in-depth product level adaptations with major software and hardware manufacturers such as Huawei Storage, Huawei Kunpeng, Microsoft, Unicom, Kirin, Feiteng, Shenzhou Kuntai, Shuguang, and Lanqi.
As of June 30, 2023, the company had more than 1,100 employees, including more than 30% R&D personnel. The company attracts and retains outstanding talents through a competitive remuneration system and user-friendly management methods, and introduced a restricted stock incentive plan for 2023, covering 200 employees, effectively bundling employees' vital interests with the company's development, which is conducive to enhancing the cohesion and combat effectiveness of the core team and providing a strong impetus for the company's healthy, sustainable and high-quality development.
Incident catalytic Xinchuang needs to be launched urgently, and companies on the Grand Circuit are expected to benefit.
According to Ai Media Consulting's forecast, with the wave of digitalization and domestic substitution surges, basic software has ushered in rapid development, and databases have ushered in a golden period of development as a key link.
China's database market will reach 32 billion yuan in 2022, and is expected to reach 63 billion yuan in 2025, with a CAGR of 25.33%.
A series of recent events and policies have stimulated the development of credit innovation. ① On December 20, 2023, the Securities Regulatory Commission approved the registration application for the initial public offering of shares by Wuhan Dameng Database Co., Ltd. ② On December 26, 2023, the Ministry of Finance and the Ministry of Industry and Information Technology issued a notice on procurement requirements standards for desktop computers, workstations, servers, databases and operating systems. The notice was launched in August 2023 to solicit comments. ③ Vice Minister of Finance Wang Dongwei said on February 1, 2024 that policy tools such as financial subsidies, loan interest rates, and tax incentives will be used to promote solutions to difficult problems and blockages in basic products, core technology, and key software.
Profit forecast and investment suggestions: On March 14, 2023, the company issued the “2023 Restricted Stock Incentive Plan Implementation Assessment Management Measures”. The assessment targets for operating income are: based on 2021 revenue, the 2023 revenue growth rate is not less than 60%; the 2024 revenue growth rate is not less than 125%; and the 2025 revenue growth rate is not less than 200%. Furthermore, when the trigger value is reached, the company level can also obtain an 80% ownership ratio: based on 2021 revenue, the 2023 revenue growth rate is not less than 48%; the 2024 revenue growth rate is not less than 100%; and the 2025 revenue growth rate is not less than 160%.
We believe that facing the impact of artificial intelligence in the industry, as well as product agility and popularization improvements, the company's products are also iterating towards multi-modality, intelligence, agility, and popularization. The company works both internally and externally, continuously improves ecological construction, builds a partner structure system, adopts different cooperation strategies, improves the talent system internally, and launches stock incentive plans. In addition to this, Xinchuang needs to be launched urgently, and the company is expected to benefit from being on the database circuit. In this context, we believe that the company is expected to reach the target value of equity incentives in 23-25. The company's main revenue consists of software products and technical services, and other businesses account for a relatively small share. Combined with equity incentive targets, we expect the company's software product and technical service revenue growth rates to be 45%, 46.5%, and 47.8% respectively in 23-25; the company's revenue growth rates will be 43.22%, 44.12%, and 45.17%, respectively. The gross margin of the company's software products and technical services continued to increase, reaching 68.75%, 69.75% and 70.75% respectively in 23-25; the company's overall gross margin was 57.96%, 59.67%, and 61.53%.
We expect the company's revenue for 2023-2025 to be $534/7.69/1,117 million yuan, respectively, net profit to mother of -2.71/-1.95/0.04 billion yuan, and corresponding EPS of -2.24/-1.61/0.03 yuan, respectively. Combined with the current industry stage and the company's growth rate and barriers, the company was given a dynamic PS10-12 times in 2024, with a 6-month reasonable value range of 63.65-76.38 yuan. For the first time, coverage gave it a “superior to the market” rating.
Risk warning: Product iteration is less rapid than expected; market competition intensifies; accounts receivable account is relatively high.