Incident: ① On the evening of May 19, it was announced that the company recently received the “Approval to Register the Issuance of Shares to Specific Targets” from the China Securities Regulatory Commission, agreeing to the company's registration application to issue shares to specific targets. The number of shares issued this time is no more than 239 million shares, and it is planned to be listed on the Shenzhen Stock Exchange GEM. ② On May 17, the company and Huawei signed a comprehensive cooperation agreement, which will give full play to their advantages in their respective fields, actively promote cooperation in digital intelligence transformation, steadily promote industrial digitalization and digital industrialization development, create competitive products, and achieve complementary advantages, mutual benefit and common development.

Raise capital for AI project research and development, and I am optimistic about the company's long-term value delivery. The total amount of capital raised for this distribution to specific targets does not exceed RMB 1,845 million. The net amount raised after deducting the issuance fee will be used for the Piotan Industry Big Model R&D and AIGC application industrialization projects. After this release to specific targets, it will help enhance the company's capital strength and asset size. The capital raising investment project has good market prospects, is conducive to increasing the company's business revenue and long-term profitability, and further enhancing the company's core competitiveness.

A comprehensive cooperation agreement was signed with Huawei to provide mutual support and win-win benefits. The company and Huawei combine their respective technical characteristics to create full-stack autonomous and controllable software and hardware integrated solutions in public safety, media, government, finance, public opinion and other industries, promote the implementation of software and hardware integrated solutions compatible with the Huawei Ascend and Piotanda models, actively create differentiated competitive advantages in the industry, and jointly promote them to the outside world for mutual benefit and win-win results. ① In terms of the big model, the company uses its own high-quality data to fine-tune the model based on the Huawei Pangu Big Model; ② In terms of cloud services, the company uses HUAWEI CLOUD resources and technology to incubate new SaaS products and enrich the product ecosystem; ③ in terms of market operation and overseas, the company is expected to use Huawei's global distribution capabilities, global operating manpower resources, global cloud service infrastructure service system, and extensive overseas customer resources. The two sides will jointly promote and cooperate on products and solutions to promote better business development in overseas markets. We believe that the “strong alliance” of cooperation between the company and Huawei is expected to advance the company's product development process, enhance product capabilities and technical barriers, enrich the company's product matrix, and enhance market competitiveness, thereby seizing domestic and foreign market share and boosting the company's performance.

The ToG business has sufficient orders in hand, technology and product capabilities have been recognized by the market, and performance is guaranteed during the year. On May 20, the company said it had won the bid for a municipal public opinion information system project. The project uses advanced artificial intelligence technology and big data processing technology to gather public opinion risk data, build a business application system, provide system service capabilities such as public opinion monitoring and discovery, collaborative processing, evaluation and statistical analysis, etc., to achieve multi-terminal display and early warning, and assist in decision-making and command work. This is based on autonomous and controllable products, big data, and AIGC big model capabilities. Starting from actual work, the company empowers business development through digitalization and constructs a new pattern of overall intelligent management of territorial business. Once the implementation results are verified, it is expected that more government public opinion information system project orders will be signed to further enhance profitability.

Investment advice: As a leader in semantic intelligence in China, the company continues to focus on large-scale model scenario-based applications and industry implementation through fixed capital raising and comprehensive cooperation with Huawei. In the future, along with the deep integration of AI and industry and business expectations, the company is expected to take advantage of the AI industry's growth dividends and set sail to build a new growth curve. The company's net profit for 2024-2026 is estimated to be 236/345/424 million yuan, respectively, and EPS is 0.30/0.43/0.53 yuan, respectively. Corresponding to the current PE of 49/33/27 times, respectively, it maintains a “buy” rating.

Risk warning: risk of policy changes, technology development falling short of expectations, risk of macroeconomic environment changes, overseas business promotion falling short of expectations, new projects falling short of expectations.