Event Overview: On August 28, 2024, the company released its 2024 semi-annual report. During the reporting period, the company achieved operating income of 1.382 billion yuan, an increase of 15.09%; net profit to mother was 24.7231 million yuan, an increase of 10.83% year on year; net profit after deducting non-return to mother was 20.3789 million yuan, an increase of 16.40% year on year.

The internationalization process of Shiji enterprise platforms continues to accelerate, and 2024H1 ARR increased by about 30% year-on-year, reflecting the rapid development trend of SaaS business. The Shiji enterprise platform with a core next-generation cloud architecture has successfully signed contracts with international hotel groups such as Peninsula, Intercontinental, Langting, Xinhao, RUBY, CIRCLE, TIME, and FLETCHER, as well as well-known hotel groups such as Diaoyutai MGM, First Travel Nuojin, and Anlu, and has begun mass launches. As of the first half of 2024, the company has successfully launched more than 300 hotels in the Intercontinental Hotels Group, which has signed contracts with the benchmark customer, and has launched a total of 433 hotels in hotel groups such as Peninsula, Intercontinental, Langham, Ruby, Sircle, TIME, Dakota, and NeWhoTel Collection, spread across more than 20 countries around the world.

In terms of cloud POS, Infrasys Cloud has been steadily promoted in hotel groups such as Marriott, Intercontinental, Hyatt, Hilton, Peninsula, Shangri-La, Kowloon, Accor, Wyndham, Millennium, Pan Pacific, Wanda, Changlong, Mangrove, China's top five casino and hotel groups, and Mandarin Oriental in Hong Kong, China, laying a solid foundation for the continuous development of the business. As of the first half of 2024, the company's Infrasys Cloud cloud POS products were launched to a total of 3,955 customers.

Looking at ARR, an important SaaS-related indicator, the company's SaaS business year repeatable subscription fee (ARR) of 446.9076 million yuan as of the end of June 2024, an increase of about 30.8% over the SaaS business year repeatable subscription fee (ARR) of 341.5943 million yuan at the end of June 2023; as of the end of June 2024, the total number of SaaS business enterprise customer (end user) stores exceeded 0.08 million hotels, with an average renewal rate of over 90% .

Changlian business is developing rapidly, and the platform-based strategy continues to advance. Changlian's production reached 11.68 million overnight in the first half of 2024, up 32.7% from 8.8 million overnight in 2023. At the same time, in terms of international business, Changlian has completed direct connections to more overseas groups and channel management systems, including important partners such as D-edge and STAAH. 2024H1 has completed a total of 28 direct connection projects between domestic and foreign channels and these suppliers. In terms of platform technology, Changlian completed product development for the “Book & Pay” platform integrating online reservation+payment, 2024H1 completed the official launch of 55 projects, and completed the reservation + single settlement payment solution realized through UnionPay payment channels.

Investment advice: The company has continued to advance since the internationalization process, using the Shiji Enterprise Platform and Infrasys Cloud as a starting point to build a large number of benchmark customers, which is expected to embark on a new journey of growth. The estimated net profit for 2024-2026 is 0.087/0.209/0.475 billion yuan, respectively, and the corresponding PE is 168X, 70X, and 31X. Currently, the company is mainly inspecting PS during the transition period. The 2024-2026 PS are 4X, 3X, and 3X respectively, maintaining a “recommended” rating.

Risk warning: International market business development falls short of expectations; new technology and product development falls short of expectations; risk of increased competition in the industry.