The incident company released its 2023 annual report. During the reporting period, it achieved revenue of 782 million yuan, a year-on-year decrease of 13.84%; realized net profit of 364.66 million yuan, a year-on-year decrease of 71.45%; and realized net profit deducted from non-mother of 2,428,600 yuan, a year-on-year decrease of 96.97%.

Short-term performance was squeezed externally, and cost investment showed the ability to operate continuously: during the reporting period, the company's main business growth was unfavorable. Big data software/artificial intelligence software/security products/system integration and other revenue were $3.13/2.37/1.18/113 million yuan, respectively, or -17.4%/+11.8%/-19.1%/-33.5%, respectively. The decline in growth is mainly due to factors such as changes in the macro environment and reduced investment from industry users. The company's revenue level and profits in the government, media, public safety and other industries declined compared to the same period last year; the progress of the original projects of downstream government-related industry users in the big data software products and services market was delayed, and procurement of new projects was delayed. The average increase in the three-fee level compared to the previous year showed the company's ability to continue operating, market adaptability and strategic adjustment; sales/management/R&D expenses were 1.56/2.03/147 million yuan respectively, up 10.6%/31.0%/15.4%, respectively, and the cost rates were 19.9%/25.9%/18.8%, respectively.

In the fourth quarter, public opinion and other major industry models were launched to accelerate the deployment of vertical industry applications: In June 2023, the company officially released the “Pioneer World Model” and created a major model for the financial, media, and government industries based on its own industry theme database to meet the specialized innovation needs of the market. In the fourth quarter of 2023, the company released major industry models such as public opinion one after another to accelerate the deployment of vertical industry applications. Among them, the financial model's professional training data includes 11 billion+ financial subject data, 10 billion-level industry index data, 3 billion+ detailed industrial factor data, 200 million+ industry dynamic entities, 500+ indexing dimensions, 10,000+ knowledge labeling rules, and 100,000+ industry labels, which can be linked to form Muti-Agent to solve complex problems. The financial industry model has already begun an in-depth testing phase at various central offices such as the People's Daily; empowering users include the Agricultural Development Bank of China, Shanghai Pudong Development Bank Credit Card Center, Ping An Bank, and the Zhejiang Branch of the Bank of China.

The data infrastructure continues to be improved, and the “Tianmu Open Source Intelligence Platform” has been released: the company's data asset platform has 200 billion pieces of high-quality data resources and continues to be updated at an average rate of 500 million pieces per day.

The company continued to improve its data infrastructure during the reporting period. The company's three major data asset platforms, “Digital Star Industry Brain,” “Digital Information Platform,” and “Internet Surveying Big Data Platform”, all iterated functions based on the Tuotianda model and AI Agent, and launched new application modules. At the same time, the fourth data asset platform, the “Tianmu Open Source Intelligence Platform”, was released, which can track and mine various open source data. In terms of data infrastructure, the company continuously updates the data center (one center, five platforms) by supplementing data sources and optimizing the resource catalog. The company iterated a new version of the sub-product, aimed at developing a next-generation social media data collection system, and completed the development of the TRS Haibei search database V10 standard version. At the same time, the company is increasing research and development of the Haibei vector database, which can use memory+disk solutions to replace pure memory solutions and break through the “capacity ceiling”.

Xinchuang+cybersecurity are two grippers, long-term layout growth points: the company's technological innovation and market layout optimization, and actively responds to rapid changes in Xinchuang and cybersecurity-related fields. The company attaches importance to the construction of digital government and the development of the innovation industry, actively participates in the implementation of national policies in the field of cybersecurity and data security, and continues to expand its market share by providing high-quality products and services. In terms of data security, the company has completed the development of Tianxing's privacy computing platform V1.1; the development of the next-generation FPGA isolation board has basically been completed and has entered the mass production installation stage. In terms of Xinchuang, the company's Zhituo AI platform has completed the adaptation and summary of localized architectures such as Huawei, Feiteng, and Haiguang; it has also completed TRS distribution development, which is fully compatible with domestic replacement of ElasticSearch.

Investment advice: We expect the company to achieve revenue of 995/12.08/1,385 billion yuan in 2024-2026, an increase of 27.3%/21.4%/14.6%; achieve net profit to mother of 2.33/2.86/320 million yuan, an increase of 539.7%/22.6%/11.9%; the corresponding EPS is 0.29/0.36/0.40 yuan, respectively, and the corresponding price-earnings ratio is 49/40/36 times. Maintain a “Recommended” rating.

Risk warning: the risk of increased competition in the industry; the risk of artificial intelligence and big data technology maturity falling short of expectations; the risk of brain drain.