Revenue and profit all achieved steady growth. Cloud/platformization/globalization successfully promoted Shiji Information's semi-annual report. In 2024, H1 achieved revenue of 1.382 billion yuan (yoy +15.09%), net profit of 24.7231 million yuan (yoy +10.83%), deducting non-net profit of 20.3789 million yuan (yoy +16.40%). Among them, Q2 achieved revenue of 0.75 billion yuan (yoy +17.31%, qoq +18.87%) and net profit of 13.3334 million yuan (yoy +10.71%, qoq +17.06%). The company's cloud, globalization and platformization are progressing smoothly. We expect the company's 2024-2026 EPS to be 0.03, 0.05, and 0.08 yuan respectively. According to the segmented valuation, the estimated net profit of cloud business revenue/traditional business is 0.57/0.4 billion yuan in 24 years, which is comparable to the company's 24E 7.7XPS/29.4PE. Considering the company's accelerated promotion of cloud virtualization or helping to accelerate the opening of multiple links, the cloud-/traditional business is given 24E 8.6XPS/29.4xPE, with a target price of 6.11 yuan, a “purchase”.

Cloud ARR also increased by 31%, and the company's SaaS business is developing well due to globalization+cloud-based or continuous revenue growth. At the end of 24H1, the total number of SaaS enterprise customer (end user) stores was about 0.08 million hotels, and the average renewal rate was over 90%. From a cloud revenue perspective, in June 2024, the company's SaaS business annual recurring subscription fee (ARR) reached 0.447 billion yuan, an increase of 30.8%, and cloud transformation progressed rapidly. By the end of 24H1, the cloud catering system Infrasys Cloud had a total of 3,955 customers, and the new Shiji Enterprise Platform (SEP) benchmark customer, Melco Hotels Group, had successfully launched more than 300 hotels in the Intercontinental Hotels Group, which had already signed a benchmark customer, and a total of 433 hotels had been launched in major hotel groups. We are optimistic about the promotion prospects of the company's cloud catering system and enterprise-level hotel information system. Cloud ARR may continue to grow rapidly with the promotion of cloud products, providing impetus for revenue growth.

Firmly promote platformization and continuously open up space for growth

The company firmly promotes platformization and continuously extends the hotel information system upstream and downstream. Directly connected to the platform Changlian 24H1 production reached 11.68 million overnight, an increase of 32.7%. 24H1 connected more than 180 directly connected projects, an increase of 13% over the previous year. In terms of platform technology, Changlian completed product development for the “Book & Pay” platform integrating online reservation+payment. During the reporting period, 55 projects were officially launched, and the transaction volume increased steadily. With good card slots in the hotel information system, the company is expected to continue to reach more links and further open up new growth space.

Improved operational efficiency and year-on-year improvement in cash flow

24H1's sales/management/ R&D expenses rate was 10.51%/26.33%/11.12%, -1.97pct/-3.09pct/ -1.60pct year-on-year. The company's operating efficiency has improved, and future profitability is expected to gradually increase. 24H1's net operating cash flow was 0.026 billion yuan (-0.064 billion yuan in the same period last year). Repayments increased significantly, mainly due to more new projects and increased collection efforts in the current period. The company continues to improve operational efficiency and cash flow, and is expected to continue to achieve high-quality development as downstream demand gradually recovers.

Risk warning: macroeconomic fluctuations; progress in the marketing of cloud-based products falls short of expectations.