Performance performance

On August 27, 2024, the company released its 2024 interim report

[Overall performance]

(1) Revenue for the first half of 2024 was 33.25 billion (+24.44%), net profit attributable to mother - 0.038 billion, net profit not to mother - 0.089 billion.

(2) 24Q2 revenue 17.875 billion (29.59%), net profit attributable to mother - 0.055 billion, net profit not attributable to mother - 0.095 billion.

[Business Segmentation]

The digital and information services business achieved revenue of 0.682 billion yuan (+89.28%) by product score, the high-tech industrial engineering service business achieved revenue of 31.316 billion yuan (+24.60%), the digital heating and new energy service business achieved revenue of 1.112 billion yuan (+5.24%), and the other product service business achieved revenue of 0.14 billion yuan (-17.75%)

[Gross profit margin, cash flow]

2024 H1 gross profit margin 9.54% (year-on-year decrease of 1.12pct), 24Q2 gross profit margin 8.97% (year-on-year decrease of 2.00pct);

2024H1 net operating cash flow-2.841 billion, 24Q2 net operating cash flow -0.929 billion.

[Fee rate]

In 2024, the H1 sales/management/R&D expense ratio was 1.41%/2.71%/3.09%, the sales expense ratio decreased by 0.32 pct year on year, the management cost ratio decreased by 0.29 pct year on year, and the R&D cost rate decreased by 0.06 pct year on year.

In Q2 2024, the sales/management/R&D expense ratio was 1.27%/2.57%/3.24%, the sales expense ratio decreased by 0.59 pct year on year, the management expense ratio decreased by 0.37 pct year on year, and the R&D cost rate decreased by 0.29 pct year on year.

Note: The above growth rate uses yoy as a year-on-year ratio

Performance reviews

Following the electronic strategy, the revenue growth rate of the digital and information business is impressive. The company's 24H1 digital and information service business revenue growth rate was impressive. The year-on-year growth rate was as high as 89.28%, and the sector's comprehensive gross margin reached 36.27%, an increase of 12.22% year-on-year. Among them, China Electronics Cloud is an important part of this sector. 2024H1's revenue reached 0.446 billion yuan, an increase of 256.26% over the previous year.

We believe that as the company's data innovation business continues to deepen, the sector's revenue is expected to continue to grow.

Fee control results are remarkable, and losses continue to narrow

The company's 24H1 & 24Q2 expense ratios were reduced simultaneously. At the same time, the company's 24H1 net profit was -0.038 billion yuan, which is significantly narrower than in '23 and '22. In a situation where competition in the macro environment intensifies, we believe that the company's steady management policy is expected to bring about a continuous increase in profit throughout the year.

Profit forecasting and valuation

We predict that the company will achieve revenue of 63.002/71.276/81.524 billion yuan in 2024-2026, with year-on-year growth rates of 11.94%/13.13%/14.38% respectively, corresponding net profit of 0.4/0.484/0.637 billion yuan, corresponding year-on-year growth rates of 21.21%/21.26%/31.55% for 24/25/26, respectively, and 0.35/0.43/0.56 yuan for EPS, 34.75/ 28.66/21.78 times Maintain an “Overweight” rating.

Risk warning

Macroenvironmental risks, risk of policy implementation falling short of expectations, and R&D investment affect the company's overall operating performance.