Event: The company publishes its 2024 mid-year report. 1) From January to June 2024, the company achieved operating income of 0.352 billion yuan, an increase of 22.41% year on year; net profit attributable to shareholders of listed companies was 0.103 billion yuan, an increase of 40.68% year on year. 2) The company's 24H1 gross profit margin was 97.16%, up 1.41 pct year on year; sales expense ratio/management expense ratio/R&D expense ratio were 38.83%/12.79%/26.13%, respectively. The sales expense ratio and R&D expense ratio decreased by 3.16/0.15 pct over the same period; the management expense ratio increased 0.18 pct year on year.

The marketing system is improving, building a service ecosystem upwards and deepening the scope of services downwards. The overall sales trend of 24H1 is improving. The company is focusing on improving the marketing system to drive business performance growth by optimizing market channel layout, consolidating existing traditional markets, and expanding key industry resources. From the perspective of downstream service customers, the scope of application for financial customers continues to expand, and the scope of construction expands from traditional OA offices to the field of operation and production, and business scenarios tend to be diversified and deepened; judging from the upstream service ecosystem, the company and many leading ISVs carry out technical adaptation and joint formulation of solutions to form deep bonds with them to help market sales.

Based on research and development, the database product matrix with independent intellectual property rights has been perfected. The company adheres to original innovation and independent research and development of core technology. It has now mastered many core cutting-edge technologies in the field of data management and data analysis, and has obtained corresponding intellectual property rights. In the first half of 2024, the company was awarded the “Eighth Batch of National Manufacturing Individual Champion Enterprises” by the Ministry of Industry and Information Technology, and was listed as a “National Technological Innovation Demonstration Enterprise” by the Ministry of Industry and Information Technology.

As of June 30, 2024, the company has obtained a total of 333 invention patents, 2 design patents, and 378 software copyrights. Currently, projects such as cluster database storage disaster recovery and high-performance concurrent processing technology, nationally produced database all-in-one computers for core business applications, distributed databases, document databases, and graph databases are under study.

Investment advice: The company is leading in the Xinchuang database industry. The database is highly commercialized, the centralized database DM8 technology is smooth and compatible, the channel construction area is complete, and it has full-stack database product capabilities to help Xinchuang enter the core system to replace the deep-water area. The company's net profit for 2024-2026 is expected to be 0.35/0.418/0.51 billion yuan, maintaining a “buy” rating.

Risk warning: There is a risk that Xinchuang's progress falls short of expectations, technology implementation progress falls short of expectations, market competition intensifies, and public data used in research reports may lag behind or not be updated in a timely manner.