Incident: iFLYTEK released its 2024 mid-year report. 2024H1 achieved total revenue of 9.325 billion yuan, an increase of 18.91% year over year; net profit to mother of -0.401 billion yuan, turning a year-on-year loss.
By business, education products and services, development platforms, smart hardware, and smart cars have maintained growth.
1) Education products and services: 2024H1 achieved revenue of 2.86 billion yuan, an increase of 25.14% over the previous year, accounting for 30.66% of total revenue. Currently, iFLYTEX smart education products have been used in 32 provincial administrative units across the country and overseas markets such as Japan and Singapore;
2) Information engineering: 2024H1 achieved revenue of 0.664 billion yuan, a year-on-year decrease of 21.76%, accounting for 7.13% of total revenue;
3) Open platform: 2024H1 achieved revenue of 2.345 billion yuan, an increase of 47.92% over the previous year, accounting for 25.13% of total revenue. iFLYX Open Platform has opened 708 internationally leading AI capabilities and solutions, gathering more than 7.06 million developers, with a total number of applications exceeding 2.48 million;
4) Smart hardware: 2024H1 achieved revenue of 0.9 billion yuan, a year-on-year increase of 56.61%, accounting for 9.65% of total revenue. As of June 30, 2024, smart hardware hearing aids had more than 90,000 registered users;? 5) Carrier-related business: 2024H1 achieved revenue of 0.902 billion yuan, a year-on-year decrease of 6.94%, accounting for 9.67% of total revenue;
6) Smart cars: 2024H1 achieved revenue of 0.352 billion yuan, an increase of 65.49% over the previous year, accounting for 3.78% of total revenue. In the first half of the year, nearly 4 million sets of intelligent automotive front-mounted products were shipped. The number of online interactions exceeded 6 billion, an increase of 132% over the previous year, and the average monthly active users reached 27.28 million.
iFLY Spark 4.0 is benchmarking GPT4 Turbo and continues to advance the commercialization process. iFLYTEK 2024H1 invested 2.191 billion yuan in R&D, an increase of 32.32% over the previous year; the company made every effort to increase investment in the development of the “IFLY Spark” big model and maintain industry leadership, while speeding up the implementation of the large model; IFLY Starfire V4.0 not only fully rivals the GPT-4 Turbo in terms of base capability, but also ranked first in 8 test clusters, and released various software and hardware products for education, medical care, automobiles, and enterprise intelligence, etc. It shows the company's leading ability in implementing large model applications.
Investment advice: As a leading domestic artificial intelligence company, iFLYTEK actively views the company's large-scale model layout and AI application implementation. EPS is expected to be 0.21 yuan, 0.31 yuan, and 0.46 yuan respectively in 2024. The market value corresponding to PE on August 23, 2024 will be 158X, 110X, and 74X, respectively, maintaining the “recommended” rating.
Risk warning: Uncertain external environment; technology research and development falling short of expectations; industry competition heightens risk.