Focus on AI+ data element industry opportunities and maintain a “buy” rating
Shanghai Steel Union released its quarterly report. In Q1 2024, revenue of 17.542 billion yuan (yoy +0.18%, qoq -11.26%) and net profit to mother was 49,1551 million yuan (yoy -10.04%, qoq -33.04%), mainly due to a decrease in government subsidies received, deducting non-net profit of 468.962 million yuan (yoy +26.45%). Expected 24-26 EPS 0.88/1.11/1.40 yuan. According to segmented valuation, the 24E industry data service sector has revenue of 962 million yuan. Comparable companies average 24E 5.4xPS (Wind), giving 24E 5.4xPS; it is estimated that steel and silver e-commerce will contribute 155 million yuan in net profit to listed companies in 24 years; comparable companies will average 24E 24.9xPE (Wind), giving 24E 24.9xPE (Wind), with a target price of 28.23 yuan, “buy”.
Industry data: Continuously rich products, focus on revenue growth
In the first quarter of 2024, the company's industrial data service business achieved revenue of 177 million yuan, a decrease of 6.5% over the same period last year. Among them, the subsidiary Shandong Longzhong Information Technology Co., Ltd. achieved revenue of 39 million yuan, an increase of 1.7% over the same period last year. The company continues to iterate the Steel Union data processing platform to achieve online, standardized and automated data management, strengthen data asset management, and ensure the export of high-standard, high-quality and reliable data to the outside world. The company deepens cooperation with financial institutions, jointly develops data products, broadens market resources, and provides differentiated value-added services. We believe that the company continues to enrich its products in the industrial data sector, and the revenue from industrial data services is expected to accelerate in the future.
Trading services: Settlement volume continues to grow, daily trading volume reaches a record high
In the first quarter of 2024, the settlement volume of the company's steel and silver platform was 11.7237 million tons, an increase of 7.8% over the same period last year. On April 17, 2024, the platform's single-day trading volume exceeded 479,000 tons. The daily trading volume reached a record high four times in April, and continued to break through. Inventory at the end of 24Q1 was 43.75, up 102.2% from the end of 23Q4, mainly due to the increase in the scale of the supply chain business. Steel and silver e-commerce is centered on consignment transactions, while expanding into the fields of warehousing, processing, and software informatization services, forming a comprehensive strategic layout. Steel and silver e-commerce has embedded supply chain services into different distribution scenarios, and innovatively launched supply chain service products for scenarios such as zero-order collection in upstream steel mills, direct procurement at downstream terminals, and small-order spot procurement by small and medium-sized trading enterprises. We believe that as the volume of transactions continues to grow, it is expected to continue to drive the company's growth.
The internal commercialization of AI products has been implemented, and it is expected to benefit from the AI+ Data Factor Industry Opportunity Company's overall gross profit margin of 1.55%, a year-on-year change of +0.02pct. The sales/management/R&D expense ratio is 0.55%/0.22%/0.16%. Net operating cash flow was $370 million, +262.73% YoY. In terms of the company's AI application, the “Xiaogang” digital intelligent assistant implements functions such as content creation assistance, market sentiment analysis, multimedia generation, and intelligent customer service within the company to enhance diverse content production capacity and efficiency. The company actively grasps opportunities in the data element industry and has signed strategic cooperation agreements with the Shanghai Digital Exchange and Shenzhen Data Exchange. We believe that the company may benefit from the development of the data factor/AI industry based on data and scenario cards.
Risk warning: The risk that the expansion of industrial data services falls short of expectations, and the risk that steel and silver e-commerce transaction volume will decline.