Event: On April 24, 2024, the company released its 2023 Annual Report. In 2023, the company achieved revenue of 10.544 billion yuan, an increase of 11.39% over the previous year; a gross profit margin of 24.20%, an increase of 3.42% over the previous year.

Comment: The company's performance turned losses into profits, and growth potential began to show. In 2023, the company achieved net profit of 73.91 million yuan, compared to -343 million yuan in the same period last year, an increase of 417 million yuan over the same period last year. By industry, healthcare and social security achieved revenue of 2,571 billion yuan, up 29.74% year on year; smart car connectivity achieved revenue of 3,916 billion yuan, up 9.36% year on year; smart cities achieved revenue of 1,623 billion yuan, down 2.41% year on year; enterprise connectivity and other aspects achieved revenue of 2,433 billion yuan, up 8.64% year on year. By product, independent software, products and services achieved revenue of 9.035 billion yuan, an increase of 12.21% year on year; in terms of system integration, revenue of 1,332 billion yuan, up 7.58% year on year; and in terms of property advertising, revenue of 177 million yuan, an increase of 0.61% year on year.

The health sector is growing rapidly, and automobile-related businesses continue to accelerate. In the health sector, the company maintained a business growth rate of about 30% in the field of healthcare and social security; maintained the largest market share in the field of health insurance information systems, the social IT solution industry, and the medical IT application market; and signed nearly 20 tens of millions of projects covering the key areas of “smart hospitals”. In terms of smart cars, the smart cockpit platform developed by the company has been mass-produced on the Jieyue 01 and Geely Galaxy E8 models, and has maintained in-depth cooperation with many domestic and foreign manufacturers, and overall shipments continued to increase; the overseas business grew significantly, adding about 3 times the same period last year; the company ranked first among domestic manufacturers in terms of smart cockpit domain controllers, in-vehicle wireless terminals, and C-V2X car-side integration solutions.

Establish a science and technology research institute to continue to promote innovation in AI and other fields. In 2023, the company established Neusoft Magic Science and Technology Research Institute to focus on promoting big language model system engineering strategies. The company launched the “AI+ Medical Field Big Model”, a large-scale model in the field of “AI+ Healthcare”, as well as a series of “AI+ Medical Industry Applications”, including the Flying Standard Medical Imaging Labeling Platform 4.0, virtual endoscopes, etc. Among them, the Flystandard medical imaging labeling platform has been used in many well-known medical institutions, and several AI+ applications have been applied in several benchmark projects. The company continues to reallocate research and development. In 2023, the company's R&D expenses were 1,032 million yuan, an increase of 12.16% over the previous year. 447 new software copyrights were added, 187 patents were applied for, and 175 authorized patents, of which 153 were granted invention patents, an increase of 46% over the previous year.

Continue to drive smart city construction and accelerate the in-depth layout of people's livelihood data elements. With “data elements” as the core, the company actively integrates into the “ecological community” through full-stack technology integration to help build end-to-end computing power infrastructure and drive the construction of new smart cities. The company has jointly set up data companies with the governments in Shenyang and Jinzhou, etc., and has begun operation one after another, deeply participating in the national platform and health insurance data management in various provinces and cities such as Hainan, Inner Mongolia, Suzhou, and Nantong.

Investment advice: The company's associated companies are still in the investment period. The impact of losses on the company's profit forecast was adjusted. The profit forecast for the company was lowered from 617 million yuan to 284 million yuan in 2024. At the same time, the estimated profit due to mother for 2025-2026 is estimated to be 417/556 million yuan, adjusted to a “holding” rating Risk warning: the company's cost reduction and efficiency fall short of expectations, and automobile intelligence falls short of expectations, market competition intensifies, macroeconomic risks