Key points of investment:

The company published its 24-year report. The company 24H1 achieved revenue of 0.55 billion yuan, +20.5% year over year; achieved net profit due to mother of 0.13 billion yuan, a year-on-year loss of 0.15 billion yuan; realized deducted non-net profit of -0.27 billion yuan, a year-on-year loss of 23.64 million yuan. The performance was in line with expectations.

Deeply cultivate the cornerstone business and grow steadily in revenue. According to the company report, the company's 24H1 achieved electronic data forensic revenue of 0.23 billion yuan (YoY +15.5%), and the gross margin reached 65%, +3.1 pct compared to the previous year. Public safety big data achieved revenue of 0.2 billion yuan (YoY +10.8%). The company's “Tianqing” model is the first large-scale model in the field of public safety registered and approved in the country. Combined with the “Qiankun” big data operating system, it created multiple police application scenarios and launched products such as intelligent assistants and all-in-one computers.

The new sector continues to expand, and revenue growth is remarkable. According to the company report, the company's 24H1 digital government and enterprise digitalization achieved revenue of 67.7 million yuan (YoY +42.9%), and gross margin declined due to changes in the scope of new business investment and consolidation. The company continues to make efforts in the five major fields of government affairs, fire protection, rail transit, large-scale projects, and rural revitalization, developing benchmark projects in industries such as mining, agriculture, and power plants, and the industry landscape continues to expand.

The cyber security business subsequently or continues to benefit from shareholder collaboration. According to the company report, the company 24H1 achieved cybersecurity and digital security revenue of 43.37 million yuan (YoY +102.3%), and the gross margin increased to 52.3%. Build a “one center, two systems” product structure around “data security”, and continue to expand network security-related projects.

The three-fee rate has been drastically reduced, and the improvement in quality and efficiency is remarkable. According to the company report, 24H1 launched “diligence and frugality” to improve quality and efficiency. Sales/management/R&D expense ratios were -2.1 pct/-15.5 pct/-9.6 pct, respectively. The cost control results were remarkable, and losses have narrowed markedly.

Accounts receivable have been reduced, and the quality of operations has improved. According to the company's announcement, the company's 24H1 accounts receivable decreased by 2.88% compared to the beginning of the year, inventory decreased by 9.02% compared to the beginning of the year, and “two gold” slimmed down due to high revenue growth, and the quality of the company's operations improved.

Deepen AI application capabilities and consolidate leading positions. Based on the “Tianqing” public safety model and the “Qiankun” big data operating system, it has achieved product transformation and upgrading in various business fields. In addition to the basic digital forensics business, it has simultaneously built a core engine for intelligent and high-quality development in network security and big data expansion businesses of government enterprises and institutions, consolidating its leading position.

Maintain a “buy” rating. Maintaining the profit forecast, it is expected to achieve revenue of 2.35, 2.78, and 3.31 billion yuan in 24-26, and achieve net profit of 0.28, 0.34, and 0.43 billion yuan. Since the company's AI products have entered the market, the AI security field has broad room for growth. Based on localization needs and the strategic position of the SDIC Group, combined with product advantages, the company maintains a “buy” rating.

Risk warning: The expansion of AIGC regulatory products fell short of expectations, downstream boom growth fell short of expectations, and competition in the data security industry intensified.