Domestic big data software is scarce, and we are deeply involved in big data technology. Starlink Technology is a leading developer of basic big data software in China. It mainly provides three basic software products and supporting services: big data and cloud infrastructure platforms, distributed relational databases, and data development and intelligent analysis tools to help customers achieve digital transformation.

Have a core R&D team to establish technical advantages. The core team has been deeply involved in the field of big data for more than ten years. It is one of the earliest teams in China to develop and commercialize basic software technology for big data, laying a solid foundation for the company's R&D strength.

Revenue is rising steadily, and customer coverage continues to be broadened. The company's revenue grew from 113 million yuan in 2018 to 373 million yuan in 2022, and the four-year CAGR reached 34.8%; among them, the big data and cloud-based platform software business was the company's main source of revenue. In 2022, this product accounted for 35.1% of revenue. Currently, finance and government are important areas of application of the company's products.

With the support of both policy and technology, the company is expected to usher in leaps and bounds. We believe that with the further deepening of Xinchuang and the continuous evolution of its technical architecture, the company can hope to seize the opportunity to “overtake the curve”.

Xinchuang has entered the fast track of development, and the self-developed code rate for core products exceeds 70%. Currently, the pace of state-owned credit innovation is basically setting the tone. State-owned Assets Administration Commission Document No. 79 comprehensively guides the development and progress of the state-owned credit innovation industry, and requires that domestic credit innovation replacement be completed by 2027. The company's core product, Transwarp Data Hub (TDH), has a self-developed code rate of over 70% of the 12 million lines of code. At the same time, the company's products focus on compatibility with domestic software and hardware ecosystems, and have completed in-depth adaptations with domestic hardware such as Feiteng and Kunpeng, and domestic operating systems such as Kirin and UOS.

Distributed + cloud native has become a new trend, and distributed relational databases are independently developed. Global data storage increased from 16ZB in 2016 to 54ZB in 2021, with a CAGR of 27.5%. Distributed databases can be scaled horizontally to solve the problem of increasing data volume, and have advantages in terms of scalability and cost. With the large-scale application of cloud computing technology, various traditional software products have begun to shift from an independent deployment model to a cloud service model. The company adapted to the wave of technology and independently developed the distributed analytical database ArgoDB and the distributed transactional database KunDB. Both KundB and ArgoDB are next-generation databases designed for cloud-native architectures. According to the code scanning test report of the Fifth Electronics Research Institute of the Ministry of Industry and Information Technology, ArgoDB's code autonomy rate (number of lines) exceeds 90%.

Keep up with the AI wave and open up room for growth. According to relevant data, as of May 2023, China has released 79 large models with parameters above 1 billion, and China is in a period of rapid development of large models. Under the wave of AI, the company launched Sophon LLMOps to help customers manage growing machine learning models on a large scale, improve model usage efficiency, reduce model integration management costs, and control model production environment risks. Aiming at specific business logic in the field of quantitative investment and research, Starlink Technology realized Financial-Specific-LLM training through pre-training, prompting, enhancement, and derivation of the paradigm, and launched Infinity, a major quantitative investment and research model for the financial industry, further opening up new space for the company's growth.

Profit forecasting and investment suggestions: As a scarce target for domestic big data software, the company attaches great importance to the new opportunities brought by policy+technology, adapts to the trend of the times, actively lays out product matrices, and has implemented projects in various industries. The company's revenue for 2023-2025 is estimated to be 491 million yuan/662 million yuan/895 million yuan respectively, net profit to mother is -288 million yuan/-194 million yuan/190 million yuan, EPS is -2.39 yuan/-1.61 yuan/0.08 yuan respectively, and PS is 10/7/6 times, respectively. For the first time, we have given a “buy” rating.

Risk warning: There is a risk that the implementation of domestic alternative products falls short of expectations, increased competitive pressure for talent, competitive risk of open source software or free software, and the risk that public materials used in research reports may be delayed or not updated in a timely manner.