Incident: Recently, Tonghuashun released its 2024 quarterly report. Q1 achieved total operating revenue of 618 million yuan, +1.47% and -48.08% year-on-month respectively, and Q1 achieved net profit of 104 million yuan to mother, -15.03% and -83.56% year-on-month respectively. The results were basically in line with expectations. Due to year-on-year pressure on market transactions, C-side demand was relatively under pressure. 2024Q1, the company sold goods and provided cash for services reached 657 million yuan, -11.74% year-on-year, mainly due to a decline in users' demand for financial information, which led to a decrease in sales receipts; contract liabilities were +4.15% year-on-year, reaching 1,116 billion yuan.
The company increased sales and R&D investment, and profit margins declined year-on-year. The company's total operating cost was 521 million yuan, +6.08% year over year, mainly due to the increase in sales expenses and R&D expenses. The year-on-year growth rates were +27.8% and +7.69%, respectively, mainly due to increased marketing and promotion efforts, sales staff remuneration and advertising expenses; this was due to the company's continued increase in research and development of artificial intelligence technology applications, especially research and development on large models, and increased investment in high-end talent introduction and computing power. 2024Q1's profit margin was -3.26PCT to 16.78% year over year.
Self-developed financial industry model, HiThinkGPT, lays out the AI field on a long-term basis. The company's self-developed financial HiThinkGPT model is the company's self-developed financial information, from the training materials and training framework to the design of the model structure. The pre-trained financial materials reached trillion tokens, covering various aspects of data such as stocks, bonds, futures, foreign exchange, commodity prices, macroeconomic indicators, and industry data. The HiThinkGPT Big Model has the characteristics of comprehensive real-time financial data, strong semantic understanding, professional investment suggestions, vivid forms of expression, and controlled content generation. After many rounds of early testing and optimization, the model performed well in the financial scene and was able to pass professional tests in various financial fields with high scores. The company continues to increase research and development of artificial intelligence technology applications, with a particular focus on increasing the integration of technologies related to the big artificial intelligence model with the company's existing product and service systems, providing users with better product and service quality, and further enhancing the competitiveness of the company's products.
Investment advice: The company is a leading Internet financial information service provider in China. It has relatively significant competitive advantages in terms of products, customer resources, technology, human resources, data resources, brand recognition, management team, etc. We are optimistic about the company's development prospects.
The company's diluted EPS for 2024, 2025, and 2026 is estimated to be 3.14, 3.51, and 3.94 yuan, respectively, and the corresponding PE is 39.37, 35.18, and 31.37 times, respectively, maintaining a “buy” rating.
Risk warning: Risk of increased friction between China and the US; risk of continued inversion of the China-US spread; geopolitical risk; macroeconomic downside risk; risk of systemic decline in stock market; risk of slowing fund issuance; risk of tightening supervision; risk of declining fund marketing market share.