Release a new intelligent strategy and look forward to the growth of the company's core business

On March 11, Neusoft Group held a strategy conference to announce the full launch of an intelligent solution strategy.

The newly released intelligent strategy aims to focus on fields such as smart cities, healthcare, smart vehicle interconnection, and enterprise digital transformation to provide customers with AI-enabled, data-value-based, and service-oriented solutions. We believe that the company is expected to fully seize industry opportunities and start a new round of business growth. Taking into account the losses of the innovative business in 23 years and lowering the profit forecast, the company's net profit for 23-25 is estimated to be $0.79/391/538 million yuan, respectively (previous value was $287/4.32/546 million yuan). Using the segmented valuation method, the net profit of 24E smart cars was 215 million yuan, and the net profit of other businesses was 176 million yuan. Referring to the company's smart car/other business 29.8x/26.9x 24PE, considering the company's strategic transformation advantages, the smart car/other business was given 35x/30x 24PE respectively, with a target price of 10.56 yuan (previous value of 10.87 yuan) to maintain “purchase”.

AI: Refining vertical models. Industry-level implementation focusing on AI models follows the AI big model industry opportunities. The company fully and deeply integrates AI technology and solution capabilities to accelerate “artificial intelligence +” and enable industrial upgrading and transformation. Currently, the company uses its own data and customer resources in advantageous business fields to train large models in vertical fields, and launched the Neusoft Big Language Model System Project LLM-SE, which is widely used in the fields of medical care, human society, health insurance, government affairs, media, finance, administration of justice, operation and maintenance. In 2023, the company achieved a benchmark in the medical field. Focusing on medical scenarios, the company launched various “AI+ medical” products such as the Big Model in the medical field, the Flying Standard Medical Image Labeling Platform 4.0, and a web-based virtual endoscope. We believe that AI technology will support the transformation of the company's business from function-driven software development to intelligence-driven software production, with broad long-term space.

Data: Mining the value of data elements and strengthening smart cities and healthcare business layout data as new production factors. The company fully exploits the value of data and strengthens the discovery, innovation and monetization of data value in smart cities, healthcare and other fields. Taking the medical field as an example, as a participant in 24 provincial health insurance platforms across the country, the company has been deeply involved in the national platform and health insurance data governance work in Hainan, Inner Mongolia, Suzhou, Nantong, etc.; at the same time, the company participated in the establishment of “Jinzhou Healthcare and Human Resources Data Operation Co., Ltd.” and “Shenyang Healthcare Data Co., Ltd.” to further value data elements. Thanks to the accumulation of experience in the medical field, the company will further develop data value solutions for other industries, and we believe that the company's smart city business is expected to fully benefit.

Service: accurately grasp customer needs and unlock greater business value

The company uses solutions to create new service models and provide complete solutions covering products. Taking the healthcare sector as an example, Neusoft has built an information and data management platform for medical communities to actively empower innovative county medical community solutions through analysis of operational data. Referring to the progress of overseas AI application implementation, complete engineering solutions and application scenario consulting solutions are the key to the implementation of AI technology. We believe that the company's accumulated service experience over 30 years can be expected to fully grasp the business needs of customers.

Risk warning: The intelligent driving industry has fallen short of expectations; subsidiary business has dragged down more than expected.