Recently, the company released its 24-year semi-annual report. In the first half of the year, it achieved revenue of 9.33 billion yuan (+18.9% year-on-year), gross profit increased 19.1% year-on-year, net loss to mother 0.4 billion yuan, and net loss to mother of 0.48 billion yuan after deduction. The company's education and open platform business grew at a high base, and the automobile business performed well and maintained a buying rating.
Key points to support ratings
Large model investment and changes in investment income led to a year-on-year decline in net profit to mother. The company's deducted non-net profit in the first half of the year decreased by 0.18 billion yuan compared to the same period last year, mainly due to the company's increased investment in large models, which added more than 0.65 billion yuan in the first half of the year. Net profit attributable to mother decreased by 0.47 billion yuan compared to the same period, mainly due to the large return on investment from financial assets such as Trio and Cambrian in the first half of '23. Investment income and fair value changes in the first half of '24 decreased by 0.15 billion yuan compared to the same period last year; other income decreased by 0.15 billion yuan compared to the same period last year.
Education and open platform businesses are growing at a high base. The company's education business achieved revenue of 2.86 billion yuan in the first half of the year (+25.1% year over year). Among them, G-end intelligent assessment technology has been officially delivered and applied in college entrance examinations in 14 provinces and cities; B-side after-school services have covered more than 460 districts, counties and over 13,000 schools across the country; and the C-end personalized learning manual integrates the Spark Model to achieve functions such as text generation and advanced correction. In the first half of the year, the company's open platform achieved revenue of 2.34 billion yuan (+47.9% year-on-year). From the release of “iFLY Spark” V3.5 to June 30, 2024, the number of iFLYTEX Open Platform developers increased by more than 1.08 million, the number of overseas developers exceeded 0.4 million, and the number of large model developers reached 0.58 million.
The automobile business performed well and was selected by many leading car companies on overseas platforms. The automobile business achieved revenue of 0.35 billion yuan in the first half of the year (+65.5% year-on-year). On the one hand, the rapid growth in NEV sales and the good momentum of automobile exports have led to a continuous increase in the market share of Chinese automobile brands. On the other hand, the company's ability to apply large models continues to improve: as of June 30, '24, iFLYX's voice interaction products have fully covered overseas markets exported by key countries such as the Middle East and Russia; in the first half of the year, the company shipped nearly 4 million sets of intelligent automotive front products, and the number of online interactions exceeded 6 billion (+132% over the same period last year).
valuations
The net profit for 24-26 is estimated to be $7.4, 12.1, and 1.40 billion yuan (considering the company's increased model investment and downgraded 16%-18%), EPS is 0.32, 0.52, and 0.60 yuan, and corresponding PE is 107X, 65X, and 56X, respectively. The company's education and open platform business grew at a high base, and the automobile business performed well and maintained a buying rating.
The main risks faced by ratings
Customer development falls short of expectations; cost control falls short of expectations; technology research and development falls short of expectations.