The main prices of downstream products stabilized in the medium term, and the data information business is expected to rise for a long time. The company is one of the world's leading data service providers for commodities and related industries. It has been deeply involved in the industry for more than 20 years. The data service business revenue in 2023 was 0.8 billion yuan, an increase of 16% over the previous year, a gross profit margin of 57%, and a compound revenue growth rate of 18.9% in the past three years. By the end of 2023, the company's steel union database had built 22 major industry databases, more than 150 segmented application databases, involving more than 8,000 commodities. We believe that in the medium to long term, considering that the current operation of steel mill enterprises is at the threshold of losses, compounding the old rebar inventory or simply a short-term phenomenon, rebar prices may have basically bottomed out in the medium term. Based on this, under the recovery of the downstream customer base, we are still confident about the medium- to long-term development of the company's information business.
Data entry was accelerated in 2024, and the company, as a national leader, is expected to participate in the implementation in January 2024. The “Interim Provisions on Accounting Processing Related to Enterprise Data Resources” issued by the Ministry of Finance officially began to be implemented, and the data can officially be included as an asset in corporate financial statements. As of the 2024 quarterly report, a total of 18 A-share listed companies have entered the data resources table, and the data resources are being added to the table at an accelerated pace. As a leading enterprise in the commercial trade industry, the company has accumulated a large amount of data resources through business development over the past few years. It is expected that the company will promote data entry in the future to increase profits.
Furthermore, in July 2024, the National Data Administration released the first batch of 20 “Data Factor X” typical cases. As one of the representatives in the field of trade circulation, the Baoshan District Shanghai Steel Union Industrial Chain Data Integration Application is the only successfully selected data application case in Shanghai, leading the commodity industry data application.
Accelerate AI product innovation and continuously improve data service capabilities
In December 2023, the company released the 1.0 version of the “Steel Master” vertical language model for the commodity industry, and successfully developed the commodity industry's first vertical language model application — the “Xiaogang” digital intelligent assistant, based on the three scenarios of trade, analysis, consulting, and content generation in the commodity industry. The “Xiaogang” assistant has various abilities such as price and data query, industry encyclopedia question and answer, information collation and content summary, report interpretation, analysis and prediction. It interacts with users through human-computer dialogue, simplifies the complicated and inefficient steps of traditional information acquisition, content analysis, and knowledge generation, and assists industry users to complete daily tasks more efficiently. The “Xiaogang” digital intelligent assistant is expected to be officially opened to Steel Union users at the end of July 2024, and plans to continue iterating from August to October. We believe that the company is actively embracing AI technology and its data service capabilities are constantly improving.
Profit forecast and investment advice: We predict that the company's net profit for 2024-2026 will be 0.286, 0.359, and 0.452 billion yuan (considering the macro-environmental impact, the 2024-2025 forecast will be reduced by 18-19%), corresponding to the current market value PE of 20, 16, and 13 times, respectively, to maintain a “buy” rating.
Risk warning: AI products are falling short of expectations; the data factor industry is not progressing faster than expected; macro-environmental risks.