Brief performance review
On August 24, 2024, the company disclosed its 2024 interim results: the company achieved revenue of 1.39 billion yuan in the first half of 2024, a year-on-year decrease of 5.5%; realized net profit without deducting the effects of financial expenses of 0.34 billion yuan, a year-on-year decrease of 23.3%; net profit without deducting financial expenses was 0.19 billion yuan, a year-on-year decrease of 42.3%.
In the second quarter of 2024, the company's revenue was 0.77 billion yuan, down 10.5% year on year; net profit after deducting non-return to mother was 0.25 billion yuan, down 26.3% year on year; net profit without financial expenses deducted was 0.16 billion yuan, down 36.5% year on year.
Management analysis
By business, the company's value-added telecommunications business revenue in the first half of 2024 was 0.77 billion yuan, down 11.0% year on year, mainly due to an 8% year-on-year decline in average daily turnover of A shares in the first half of the year. Among them, the average daily turnover in Q1 and Q2 increased 2% year on year and decreased 17%, respectively. Furthermore, in the first half of the year, the company's cash received from sales of goods and services fell 7% year-on-year, which may put pressure on the confirmation of corresponding business revenue in the second half of the year. The software sales and maintenance business revenue for the first half of 2024 was 0.1 billion yuan, down 7.2% year on year, mainly affected by IT expenses of downstream brokerage clients. Revenue from advertising and internet services was 0.35 billion yuan, up 9.5% year on year; revenue from fund sales services was 0.17 billion yuan, down 4.9% year on year.
In terms of expenses, the sum of sales, management, and R&D expenses increased 7.0% year-on-year in the first half of 2024, but the Q2 growth rate was only 1.7%, which is slower than the Q1 expense growth rate. The company's financial expenses increased by 0.033 billion yuan over the same period last year, mainly due to an increase in the company's investment amount.
The company has concentrated resources to invest in the field of artificial intelligence models, especially in the fields of introducing professional talents and building computing power resources. It has now built the Tonghuashun AI open platform to provide many AI products and services such as intelligent voice, intelligent customer service, intelligent financial Q&A, intelligent investment, intelligent quality inspection machines, conference transfer systems, virtual digital people, and intelligent medical assistance systems.
Profit Forecasts, Valuations, and Ratings
According to the 2024 mid-year report, we expect revenue from 2024 to 2026 to be 3.5/3.64/3.88 billion yuan, up -1.8%/3.9%/6.7% year on year; net profit to mother will be 1.36/1.4/1.54 billion yuan, respectively, up -3.4%/3.6%/9.6% year on year, corresponding to 38.1/36.7/33.5 times PE, maintaining a “buy” rating.
Risk warning
Risk of holdings reduction; AI R&D progress falling short of expectations; risk of sharp market fluctuations.