Event Overview: On August 24, 2024, the company released its 2024 semi-annual report. Revenue for the first half of 2024 was 4.513 billion yuan, up 5.98% year on year; net profit to mother was 0.133 billion yuan, up 1.41% year on year.

Deeply cultivate the digital product business and continuously improve our core competitiveness. Based on next-generation information technology such as artificial intelligence, big data, and the Internet of Things, the company has iteratively developed products such as real-time intelligent computing, IoT intelligent sensing, intelligent data engines, and video fusion analysis, which have been applied and promoted in key industries of the national economy and people's livelihood and high-end electronic equipment. 2024H1, the digital product business achieved revenue of 0.202 billion yuan, a year-on-year increase of 44.05%, and achieved good growth. In fields related to intelligent computing, such as in the field of low-altitude airspace management, a real-time signal processing platform was built, which is widely used in meteorological radar equipment, and the order scale is growing rapidly; in the field of rail transit, the company has developed a two-factor two-two safe calculation platform, and has completed various tests and entered the mass production stage. New contracts reached 30 million yuan in the first half of the year; in the field of smart medical care, it has been used in the top three hospitals in Shanghai.

The digitalization of the industry is gaining momentum, and the fields of innovation and computing power continue to be deeply cultivated. 1) Digitalization of the industry: The fintech industry is iteratively developing core product capacity building, building a “cloud, edge, and terminal integration” secure and trustworthy full-stack financial digital infrastructure, successfully implementing projects such as SPD Bank and Bank of Sichuan; the digital transportation industry, smart service area solutions have already been implemented in Jiangxi; the digital water conservancy industry iteratively creates a “four prediction” platform for flash floods, integrates big data on all elements of flash flood prevention, and combines various professional models of flash floods to create digital twin visualization scenarios to conduct detailed simulations and preview the evolution of floods in Yunnan and Tibet Progress of provincial water conservancy projects such as Hubei ; The industrial Internet industry successfully won bids for projects such as the Haier Smart Park project and the intelligent network at a BYD production base. 2) Xinchuang and computing power: The company deepens cooperation with key manufacturers in business directions such as financial credit innovation, central enterprise credit innovation, etc., and provides full-stack credit innovation services. The contract scale for 2024H1 Xinchuang reached 1.666 billion yuan, an increase of 22.24% over the previous year. At the same time, the company focuses on data center engineering business, developing low-carbon energy-saving technology innovation, enhancing intelligent data center construction and liquid cooling capabilities, improving data center energy efficiency, and improving the level of digital operation and maintenance management. The gross profit of the new 2024H1 digital infrastructure business increased 59.56% year-on-year.

At the same time, the company actively developed overseas business, continued to strengthen cooperation with important customers and strategic partners, and provided technical support for Chinese financial, operator, manufacturing and other enterprise customers to go overseas. The 2024H1 international business achieved revenue of 0.292 billion yuan, an increase of 65.59% over the previous year.

Investment advice: As a leading domestic digital solution provider for the industry, the company continues to build a “1+2+N” digital architecture system for the industry. We expect the company's 2024-2026 revenue to be 11.237, 12.752, 14.653 billion yuan, net profit due to mother 0.583, 0.641, 0.71 billion yuan, EPS 0.84, 0.93, 1.03, corresponding PE of 19, 17, and 16 times, maintaining the “recommended” rating.

Risk warning: Policy implementation progress falls short of expectations; industry competition may intensify.