Continue to increase strategic new business, be optimistic about the company's long-term development, and maintain the “purchase” rating to take into account the impact of changes in the external environment and fluctuations in the company's investment income. We lowered the 2024-2026 net profit forecast to 0.535, 0.771, and 1.038 billion yuan (previous values were 0.933, 1.201, and 1.558 billion yuan), and EPS was 0.44, 0.63, and 0.85 yuan/share, respectively. The current stock price corresponds to PE 43.8, 30.4, and 22.6 times, considering the company and mobile The cooperation gradually deepened, the synergy effect was outstanding, and the “buy” rating was maintained.

Revenue grew steadily, and the results of expense management and repayment management were remarkable. In the first half of 2024, the company achieved operating income of 1.574 billion yuan, an increase of 3.42% over the previous year; net profit to mother was -0.182 billion yuan, mainly due to fluctuations in the stock prices of participating listed companies “Aerospace Software” and “Yongxin Zhicheng”, and investment income and fair value changes declined year on year. The company's gross sales margin in the first half of the year was 56.51%, down 3.76 percentage points year on year. Among them, gross margin increased 13.77 percentage points month-on-month to 64.59% in the second quarter.

The company strengthened cost control, and the total three fees (sales expenses, management expenses, R&D expenses) in the first half of the year decreased by 2.69% year on year. The company further strengthened its repayment management. In the first half of the year, repayments increased 13.69% year on year, accounts receivable balance continued to decline compared to the beginning of the year, and sufficient capital holdings provided strength for the company's healthy and sustainable development.

Continuing to strengthen strategic integration with mobile, and develop the emerging safety circuit. With the listing of additional shares on January 5, 2024, China Mobile Group officially became the actual controller of Kai Mingchen. The company will fully integrate its unique security endowments into China Mobile's “BASIC6” science and technology innovation plan, and actively lay out new fields and tracks, focusing on emerging security fields such as AI+ security, cloud-related network security, data element security, identity trust and password application security, and industrial Internet security. Revenue from cloud security, identity trust products, 5G+ industrial Internet security testing products, and IoT security access protection products increased by more than 150% in the first half of the year.

Risk warning: macroeconomic downturn; market competition intensifies; urban safety operations fall short of expectations.