Performance performance

[Overall performance]

(1) 24H1 revenue 0.208 billion (+3.15%), net profit attributable to mother 0.021 billion (+3.23%), net profit not attributable to mother 0.014 billion (-8.95%).

(2) 24Q2 revenue 0.098 billion (-1.76%), net profit to mother 0.006 billion (+0.96%), net profit not attributable to mother 0.004 billion (+33.33%).

[Gross profit margin, cash flow]

24H1 gross profit margin 51.03% (year-on-year decrease of 1.88pct), 24Q2 gross profit margin 52.04% (year-on-year increase of 4.25pct);

24H1 net cash flow from operating activities - 0.072 billion (-23.40%), 24Q2 net cash flow from operating activities - 0.052 billion (+4.00%).

[Fee rate]

24H1 sales/management/R&D expense ratio 6.50%/15.61%/21.89%, sales expense ratio decreased by 0.27 pct year on year, management cost ratio increased 1.09 pct year on year, and R&D cost rate decreased by 2.85 pct year on year.

Key points of investment

Steady growth in the company's performance under a historically high base

The company's 23H1 revenue was 0.208 billion (+110.69%), and net profit to mother was 0.02 billion (+257.10%). 24H1's revenue was 0.208 billion (+3.15%), and net profit to mother was 0.021 billion yuan (+3.23%). The company maintained steady growth in 23 years with a high base of revenue and profit.

We believe that it has benefited from the company's continuous promotion of the development of advantageous business fields such as smart human society, smart health insurance and medical care, and intelligent electricity use.

2024H1, the company continues to be deeply involved in the construction of the Ministry of Human Resources and Social Affairs's Financial Insurance Phase II talent personnel system, and fully supports the reform and application of DRG/DIP payment methods in 16 co-ordinated regions of Shandong Province.

At the same time, it continues to increase planning and development in new business fields related to power load management, which has strongly guaranteed the stable development of the company's intelligent electricity business. In terms of regional layout, the company continues to cultivate advantageous markets such as Shandong, Chongqing, Shaanxi, Sichuan, Jiangxi, Ningxia, Jiangsu, Inner Mongolia, etc., and is expanding new companies in Henan and Fujian provinces.

Single Q2 gross margin increased year-on-year, data element business revenue increased year-on-year, and public data licensing operations were carried out in an orderly manner

The company's gross margin reached 52.04% in Q2 in '24, up 4.25pct year on year and 1.01pct month-on-month.

We think it has benefited from the company's rapid development in the data element business. 2024H1, the company's data element business achieved revenue of 14.6271 million yuan, an increase of 154.07% over the same period last year. The Jinan Public Data Authorization Operation Platform construction project constructed by the company was put into trial operation. Currently, 9 data operators have settled in, applied for 142 types of data resources, and launched 495 general data products.

Pilot work on authorized operations was carried out in financial services, healthcare, commercial insurance, etc., and 24 transactions were reached, and the number of data products delivered exceeded 3.112 million. Construction of the Dongying Public Data Authorization and Operation Platform has begun, and other regions are progressing in an orderly manner.

H1 business outside the province continued to expand throughout '23 & '24

The company's revenue in Shandong Province in '23 was 0.4 billion (+21.71%) and revenue from outside the province was 0.131 billion yuan (+8.47%). Among them, the amount of new contracts signed in the overseas market increased by 13.4% over the previous year, and revenue from outside the province accounted for about 30%.

In the first half of 2024, market revenue outside the province and the amount of new contracts signed increased by 62.37% and 10.07% respectively over the previous year.

Profit forecasting

We expect the company to achieve revenue of 0.632/0.774/0.956 billion yuan in 2024-2026, up 17.60%/22.46%/23.47% year on year, corresponding net profit to mother of 0.097/0.122/0.151 billion yuan, with year-on-year growth rates of 20.04%/25.09%/24.23% respectively, corresponding EPS 0.24/0.30/0.38 yuan, corresponding to 30.84 times PE in 2024. Maintain a “buy” rating.

Risk warning

Risk of declining core competitiveness, rising labor costs, expansion of the province's territory falling short of expectations, policy progress falling short of expectations