Dameng data: 24H1's performance exceeded the upper limit of the prospectus. The core product grew rapidly by 2024H1. The company's revenue was 0.352 billion yuan, +22.41% year over year, and achieved net profit of 0.103 billion yuan, +40.68% year over year, after deducting 95.17 million yuan without return to mother, +43.09% year over year. Revenue and profit growth rates all exceeded the upper limit of the prospectus. In Q2, the company's revenue was 0.186 billion yuan, +18.76% year over year, and realized net profit of 47.53 million yuan, +19.45% year over year, after deducting 44.29 million yuan of non-return to mother, +25.98% year over year.

By business, the company focuses on strengthening and improving its main business. License to use 2024H1 software products was 0.334 billion yuan, +27.24%, revenue accounting for 94.78%; operation and maintenance services were 14.95 million yuan, +31.09%, accounting for 4.25% revenue; all-in-one database computers sold 2.33 million yuan, +19.30%, accounting for 0.66% of revenue; database and industry solutions were 0.43 million yuan, year-on-year, -96.14%, accounting for 0.12% of revenue.

Technical research+sales investment. Industry Xinchuang replaced the 24Q2 sales/management/R&D expenses rate of 39.59%/14.34%/26.04%, respectively, and +1.62pct/+3.29pct/-0.18pct, respectively.

In terms of sales services, the company has cooperated with many leading ISVs in technology adaptation, joint solutions, etc., to form deeply bound joint solutions to help market sales. The scope of construction has also extended from traditional OA offices to more typical scenarios in the field of operation and production.

In terms of R&D, at the same time, the 2024Q2 R&D cost was 48.44 million yuan, +26.4% year-on-year. The company continues to promote research and development related to distributed native multi-mode databases, high-availability shared storage and mirroring systems.

Industry innovation has accelerated breakthroughs, and the advantages of ecological and benchmark projects are highlighted. Market share is expected to continue to increase. According to the company's prospectus, due to the national fiscal expenditure schedule, the construction of party and government informatization has slowed down, but procurement in the financial, military and other fields has accelerated, or all have achieved double-digit growth. Ecologically, as of February 2024, Dameng's original factory had more than 500 service personnel, and there were more than 5,000 engineers certified by Dameng Data Service in China. In terms of benchmarking projects, Dameng has core system benchmark projects such as Southern Fund (TA system), Haitong Securities, Dongwu Securities, and SIPG Group, which is conducive to refining database performance and improving customer trust.

We believe that the original factory+service certification+benchmark project will help the company expand its sales and service radius, or drive an accelerated increase in market share.

Investment advice: Considering that the semi-annual report exceeded expectations and industry innovation accelerated breakthroughs, we adjusted the profit forecast. Revenue was adjusted from 0.925/1.079/1.257 billion yuan in 24-26 to 0.958/1.121/1.308 billion yuan, and net profit to mother was adjusted from 0.33/0.429/0.532 billion yuan to 0.35/0.448/0.556 billion yuan, corresponding to 54.4 X/42.5X/34.2XPE in 24-26. Maintain an “Overweight” rating.

Risk warning: intensifying market competition, falling short of expectations, technological progress falling short of expectations, risk of falling inventory prices, risk of channel sales revenue concentration