[Incident] Tonghuashun announced its results for the first half of 2024: In the first half of 2024, the company achieved operating income of 1.39 billion yuan, -5.5% year-on-year, and net profit to mother of 0.36 billion yuan, or -21.0% year-on-year. EPS 0.68 yuan, ROE 5.25%.
Market activity declined, and the overall operation of the company's business was stable. The average daily share base transaction volume of the market in the first half of 2024 was 961.6 billion yuan, -6.4% year on year. Investors' demand for financial information services was greatly affected, but the overall operation of the company's various businesses was stable: value-added telecom revenue of 0.769 billion yuan, -10.9%; software sales and maintenance revenue of 0.103 billion yuan, -7.2% year on year; fund sales and other revenue of 0.17 billion yuan, -4.9% year on year; advertising and internet Promotion revenue was 0.35 billion yuan, +9.4% YoY.
R&D investment continues to grow, and AI research and development has achieved results. In the first half of 2024, the company's R&D expenses were 0.59 billion yuan, +5.1% year-on-year, accounting for 42.6% of revenue, an increase of 4.3 percentage points over the previous year. The company continues to strengthen research and development of artificial intelligence technology, and has achieved a series of results in technical fields such as large models, intelligent speech, natural language processing, machine translation, graphic images, and intelligent body construction. As of June 30, 2024, the company has obtained a total of 510 independently developed software copyrights, 103 invention patents, and published dozens of papers at top international AI academic conferences such as AAAI and ICASSP, forming a clear technological leadership.
Expense rates have risen, which has slightly dragged down the company's profits. The company's total operating cost ratio for the first half of 2024 was 73.9%, +6.6pct compared to the same period last year. The company's operating costs, sales expenses, and management expenses were +2.3%, +8.8%, and +13.3% year-on-year respectively, accounting for +1.2pct, +2.3pct, and +1.4pct of revenue over the same period.
The main reason for the increase in sales expenses is that the company has increased its marketing and promotion efforts, which has led to an increase in sales staff remuneration and advertising expenses.
Continue to increase the development of third-party fund sales business and build an Internet pan-financial intelligence service platform.
As of the first half of 2024, the “iFund” platform was connected to 220 fund companies and securities companies, selling 21,373 products on behalf of the end of 2023, an increase of 4 and 1,333 products respectively.
Profit forecast and investment advice: The net profit for 2024E-2026E is expected to be 1.16 billion yuan, 1.34 billion yuan, and 1.49 billion yuan, respectively, -17.1%, +14.9%, and +11.3%, corresponding EPS is 2.16 yuan, 2.49 yuan, and 2.77 yuan, respectively. Using a comparable company valuation method, we gave it a 2024 45-50x PE, corresponding to a reasonable value range of 97.20-108.00 yuan, corresponding to 6.2-6.9x2024E PB, maintaining a “superior to the market” rating.
Risk Warning: Internet Finance Policies Tighten