The Zhitong Finance App learned that Huatai Securities released a research report stating that it maintains the fourth paradigm (06682) “gain” rating and is based on the continuous growth of the company's forward-looking platform, product and application development business, and is expected to achieve operating income of 50/60/7.18 billion yuan in 2024-26, with a target price of HK$80.53. The company's 2023 performance slightly exceeded expectations. The increase in performance was mainly due to strong revenue growth (68%) from the Prophet AI platform. The bank continues to be optimistic about the company: 1) using major customers as a fulcrum to develop new industries and increase penetration in the industries already covered; 2) with a solid foundation of enterprise service software, it uses generative AI to restructure enterprise software to improve customer experience and development efficiency.

The main views of Huatai Securities are as follows:

The revenue growth rate of the Prophet AI platform is impressive

The company's revenue in 2023 was 4.20 billion yuan, up 36.4% year on year, of which: 1) Prophet AI platform business revenue was 2.5 billion yuan, up 68% year on year, benefiting from growing AI market demand and the company's big model and generative AI capabilities empowering products; 2) SHIFT intelligent solutions business revenue was 1.28 billion yuan, up 7.4% year on year; 3) AIGS service revenue was 420 million yuan, up 4.7% year on year.

Continue to expand the advantages of major customers, and the formula says that the big model is progressing smoothly

In 2023, the company continued to expand its large user advantage. The total number of users was 445 (+9% yoy), of which the number of benchmark users was 139 (+34% yoy), the average revenue of benchmark customers was 18.38 million yuan (+3% yoy), and the NDER (net revenue growth rate) of benchmark users was 115%. In 2023, the company's big model business has been widely implemented in the fields of finance, manufacturing, medical care, retail, real estate brokerage, education, energy, etc., improving generative AI related services for hundreds of enterprises and partners.

The Big Model has passed the national “Interim Measures on the Management of Generative Artificial Intelligence Services” and was selected as one of the first 7 big model partners in Beijing. The bank believes that the company's accumulated customer resources in the field of enterprise service software are a first-mover advantage in entering the AIGS market, and is optimistic that the company will combine generative AI with enterprise software to promote the commercialization of AI.