Incident: The company released its 2024 semi-annual report. 1H2024 achieved operating income of 1.389 billion yuan, a year-on-year decrease of 5.51%; realized net profit to mother of 0.363 billion yuan, a year-on-year decrease of 20.99%; and realized deducted non-net profit of 0.344 billion yuan, a year-on-year decrease of 23.26%.
Revenue was affected by fluctuations in the securities market, and short-term performance was under pressure. 1H2024, the company's value-added telecommunications business revenue fell 10.96%, software sales and maintenance revenue fell 7.19%, advertising and Internet promotion service revenue increased 9.45%, and fund sales and other business revenue fell 4.91%. 1H2024, the transaction amount of A-shares in the Shanghai and Shenzhen markets was 93.93 trillion yuan, down 8.54% year on year. The company's value-added telecom business revenue accounted for 55.34%, which was affected by large fluctuations in the securities market, which dragged down overall performance.
Adhering to investment in AI research and development, we have built a “big model+” product system. With 1H2024, the company's sales, management, and R&D expenses increased by 2.29 pcts, 1.36 pcts, and 4.31 pcts respectively. The large increase in R&D cost rates is mainly due to the company concentrating resources to invest in the field of large AI models, especially increasing investment in the field of professional talent introduction and computing power resource construction. With 1H2024, the company has achieved a series of results in the fields of large models, intelligent speech, natural language processing, machine translation, graphic images, intelligent body construction, etc., and applied AI in financial information, financial Q&A, investment research, code generation, customer service, marketing and promotion, office management, etc., to improve service capabilities and service efficiency.
Investment advice: As an Internet finance leader, AI technology continues to empower all business lines. B-side iFind's business has broad room for growth, the differentiated advantages of C-side AI investment are prominent, and big model technology helps platform-based transformation. We predict that the company will achieve revenue of 3.681, 4.14, and 4.765 billion yuan in 2024-2026, and achieve net profit of 1.266, 1.523, and 1.888 billion yuan, corresponding to current PE of 41x, 34x, and 27x, respectively, maintaining an “incremental” rating.
Risk warning: institutional business development falls short of expectations; AI big model development falls short of expectations; financial market systemic risk.