Key points of investment

Investment events: Recently, the company released its 2024 semi-annual report. In the first half of 2024, the company achieved operating income of 2.244 billion yuan, a year-on-year increase of 10.90%; net profit of 0.12 billion yuan, a year-on-year decrease of 20.17%; net profit not attributable to mother 1.

1.8 billion yuan, down 15.37% year over year.

Revenue achieved steady growth, and customer strategies were gradually verified. In 2024 H1, the company achieved revenue of 2.244 billion yuan, a year-on-year increase of 10.90%. By business, the IT services sector achieved revenue of 1.436 billion yuan, an increase of 9.50% year on year; the business process outsourcing sector achieved revenue of 0.808 billion yuan, an increase of 13.50% year on year. Among them, the software product and solution product line achieved revenue of 0.479 billion yuan, an increase of 11.63% year on year; the IT infrastructure service product line achieved revenue of 0.109 billion yuan, an increase of 36.21% year on year; and the customer service and digital marketing product line achieved revenue of 0.41 billion yuan, an increase of 36.37% year on year. The company continues to focus on high-quality major bank customers, with revenue from large state-owned commercial banks and national joint-stock commercial banks reaching 1.685 billion yuan, accounting for 75.10% of the company's total revenue; at the same time, the company is also actively expanding areas of cooperation. Among them, revenue from small and medium-sized banks was 0.21 billion yuan, up 19.24% year on year, accounting for 9.35% of the company's total revenue; revenue from non-bank financial institutions was 0.168 billion yuan, up 24.84% year on year, accounting for 7.47% of the company's total revenue; revenue from non-financial institutions 0.142 billion yuan, a year-on-year increase of 34.26%, accounting for 6.33% of the company's total revenue.

The cost control effect was remarkable, and the issuance of convertible bonds was terminated. The company's lean operation results are remarkable. 2024H1's sales/management/R&D expenses ratio was 1.57%/3.54%/9.28%, respectively. Among them, the sales expense ratio and R&D expense ratio decreased by 0.02% and 0.36%, respectively, compared with the same period last year. The company decided to stop issuing convertible corporate bonds to unspecified targets and withdraw application documents due to comprehensive consideration of changes in the external market environment, adjustments in development plans, and changes in its own actual situation.

Keep up with cutting-edge technology and explore AI application scenarios. Exploring artificial intelligence applications represented by big models is rapidly becoming the focus of the industry, and the digital development of financial institutions is moving towards a new stage of digital intelligence. In terms of artificial intelligence, the company released a natural language processing (NLP) and large model algorithm service platform, which supports unified access to large models and the construction of customized services.

At present, the company has successfully implemented various applications, including enterprise knowledge assistants, intelligent asset management business assistants, and intelligent testing assistants, and is actively cooperating with customers to explore artificial intelligence application scenarios in financial business.

Investment advice: The company's revenue for 2024-2026 is estimated to be 4.771/5.417/6.202 billion yuan, respectively, and net profit to mother is 0.411/0.49/0.59 billion yuan, respectively. The corresponding PE is 16/13/11 times, respectively, maintaining the “buy” rating.

Risk warning events: business development falls short of expectations, slow policy progress, untimely data updates, etc.