Event Overview: On April 15, 2024, the company released its 2023 annual report. In 2023, the company achieved operating income of 1,496 million yuan, an increase of 25.18%; net profit to mother of 325 million yuan, an increase of 44.31% year on year; net profit after deducting non-return to mother was 187 million yuan, an increase of 1.57% year on year.

Promote the integration of AI and multi-technology links, and empower the three major product lines to create a second growth curve. 1) Next-generation smart email demo: Released in May '23, it is expected to develop three core product capabilities, namely active service capabilities for secretaries-like, information integration and processing capabilities based on large models, and cross-domain information acquisition and storage capabilities. It also incorporates basic large-scale models such as Wenxin Yiyan, Baichuan Intelligence, Zhishu ChatGLM, and Kimi. 2) One-stop integrated development platform RicHai: In terms of multi-model access management, the model management component developed by the company can flexibly manage and schedule different AI models; in terms of search enhancement generation (RAG) technology, it supports rapid retrieval of relevant information in huge data sets and generates consistent and natural answers based on context; in terms of Agent technology, it enables efficient management and execution of AI tasks, providing customers with a more flexible and intelligent service experience. 3) Artificial intelligence engine AIBox: It aims to build an enterprise-level large-scale model application platform, build a complete industrial AI application process, achieve flexible deployment and use in the cloud and multiple terminals such as AIPC and AIPhone, provide enterprises with easy-to-use and cost-effective digital marketing tools AgentCopilot products, and provide enterprises with comprehensive and personalized smart office solutions. 4) Digital human field: Upgrading from “digital people” to “digital intelligent people”, and reconstructing application scenarios with many core technical capabilities such as AIGC-3D modeling technology routes, RTI (Real-Time Interactive) scenarios and real-time character interaction through the cooperative AiMotion motion tracking system and the “Point Cloud-Topology-Model Technology Stack”. 5) Computing power field: The company reached a cooperation with Baixin Information Technology Co., Ltd. to jointly promote and sell Shengteng server products.

Focus on the office scene to seize the opportunities in the Xinchuang market and continue to build the company's core competitiveness. The “14th Five-Year Plan” clearly states that all administrative offices and e-government systems will be replaced by localization by 2025. With “Xinchuang Email+Unified Office Platform” as the core, the company has become a major participant in the Xinchuang application software market. The RichMail email system has completed full-stack Xinchuang certification, which can meet the requirements of large and medium-sized enterprises to quickly build digital office systems and domestic replacement needs. In terms of credit innovation transformation for existing customers, large leading customers such as Bank of China, China Life Insurance, and China Southern Airlines have begun a new phase of Xinchuang transformation; in terms of expanding advantageous industries, the company has reached cooperation with China International Cargo Airlines, etc. in the field of transportation, and has successfully signed contracts with British Life Insurance and BOC Securities in the financial sector.

Investment advice: The company is a leader in the domestic email field, and has formed three major product lines: collaborative office, smart channels, cloud and big data. In the context of the new technological revolution driven by AI, the company continues to increase investment in R&D, focusing on digital people and AI+ application innovation, which is expected to open up new growth space. The estimated net profit for 2024-2026 is 3.98/4.84/5.81 yuan, respectively, and the corresponding PE is 19X, 16X, and 13X, respectively, maintaining the “recommended” rating.

Risk warning: the AI technology implementation process falls short of expectations; the recovery of downstream demand falls short of expectations; the risk of increased competition in the industry.