The net profit of 24H1 fell 77%, mainly due to a decrease in investment income and a decline in the performance of its social business subsidiary. The company 24H1 achieved revenue of 1.413 billion yuan (yoy -16.36%), net profit of 0.147 billion yuan (yoy -76.71%), after deducting non-net profit of 0.203 billion yuan (yoy -58.96%), in line with previous performance forecast expectations (net profit to mother fell 74.70% to 79.44% year on year). Among them, Q2 achieved revenue of 0.734 billion yuan (yoy -4.03%, qoq +8.28%) and net profit to mother of 48.0262 million yuan (yoy -86.71%, qoq -51.60%). The main reasons for the decline in the company's net profit are: 1) the year-on-year decline in investment income and income from transactional financial assets; 2) the year-on-year decline in business revenue and profit of social business subsidiaries. At the same time, the company plans to distribute a cash dividend of 0.09 yuan (tax included) per share to all shareholders. Taking into account the company's loss of investment income and the subsidiary's performance falling short of expectations, we lowered the company's net profit due to mother to 2024-2026 to 0.54/0.67/0.77 billion yuan (previous value: 0.73/0.82/0.92 billion yuan), respectively. Our segmented valuation method calculated the company's target market value of 13.13 billion yuan in 2024, corresponding to the target price of 10.37 yuan. Maintain a “buy” rating.

The Wingman game business grew steadily, with investment income/fair value changes/social business affecting profit 24H1 subsidiary Wingman Network achieved operating income of 1 billion yuan, down 26.6% year on year; net profit was 0.26 billion yuan, down 36.6% year on year. Mainly due to the contraction of social business, the performance declined significantly. After excluding the influence of social services, the game business is expected to continue to grow steadily. Among them, the “Wingman Whipped Egg” app has become the first product in the industry to exceed one million DAU. 24H1 has added more than 13 million new registered users, and continues to lead the DAU. In addition, the company lost 22.61 million yuan in income from its 23H1 investment, with a profit of 0.19 billion yuan in the same period last year; the loss due to changes in fair value was 81.65 million yuan, which was a profit of 0.14 billion yuan for the same period last year, which had a significant impact on net profit.

Fuchun Cloud operates steadily and actively expands digital marketing

Fuchunyun, a subsidiary of 24H1, achieved revenue of 0.196 billion yuan, up 4.8% year on year; realized net profit of 43.27 million yuan, up 5.2% year on year. Currently, the Fuyang data center in Hangzhou maintains a high charging rate, and the Beijing Sijiqing Data Center is expected to work with relevant partners to jointly build a computing power center in the future. In terms of digital marketing, the subsidiary Jiutian Interactive has built a full digital marketing chain model and obtained commercial advertising agency qualifications from many leading platforms. The subsidiary Taobao World continues to enhance the influence of the full-case marketing business and actively promotes AI-assisted design.

The Zhejiang Big Data Trading Center set up a new section. The dual model launched the Nanhu Zone, Cultural Tourism Data, and Southeast Zhejiang Industrial Data Zone through the filing of the Zhejiang Big Data Exchange Center. The data circulation and transaction system it built was included in the “No. 1 Development Project” implementation plan for digital economy innovation and quality improvement in Zhejiang Province. The communication model and social governance big model algorithm developed by 24H1 Communication Brain Technology Company and Hangzhou City Brain Co., Ltd. have all passed the National Internet Information Office's filing. Among them, the Communication Big Model became the first media-exclusive large-scale model developed by a media technology company in the country and successfully passed the registration. The dual model has been filed and the commercialization path has initially been completed, and it is expected to contribute to increased performance in the future.

Risk warning: Data elements are progressing slowly, policy risks related to the whipped egg game, and the investment business falls short of expectations.