Core conclusion: We predict that the company is expected to achieve net profit of 0.344 billion yuan, 0.419 billion yuan, and 0.501 billion yuan respectively in 2024-2026, corresponding to current PE of 54.40x, 44.61x, and 37.30x.

First coverage, giving a “buy” rating.

The company is a leading domestic database enterprise and has been deeply involved in core technology for decades. The company was founded in 2000. The core team has more than 40 years of R&D experience and technical accumulation in the database field, and has always adhered to the technical route of original innovation and independent research and development. At present, the company has mastered core cutting-edge technology in the field of data management and data analysis, and has independent intellectual property rights for all core source codes of major products. The company is committed to becoming the top international supplier of full-stack data products and solutions. At present, it has formed a “software license+solution” business layout, and its products have been widely used in many industries and fields such as party government, energy, transportation, and finance.

The database industry has broad space, and the localization process is expected to accelerate. According to data from the Big Data Technical Standards Promotion Committee of the China Communications Standardization Association, China's database market size is about 52.24 billion yuan in 2023, and is expected to reach 93.03 billion yuan by 2028. The CAGR will reach 12.23% in 2023-2028, and the industry space is quite broad. Since databases play a critical role in IT core systems, it is important to achieve autonomy and control. In recent years, the country has also successively introduced policies to promote core technology research on basic software and hardware such as chips, operating systems, and databases. We believe that the next few years will be a critical time for domestic production replacement, and companies with core technology and competitive barriers in related fields can be expected to fully benefit.

Grasping industry trends, the company actively promotes full-stack product layout. Currently, relational databases are developing in the direction of distributed, cloud-native, AI-enabled, HTAP (hybrid transactional and analytical databases), and multimodal. Aiming at the above direction, the company actively invests in research and development. While further strengthening the original centralized and relational technical advantages, the company actively explores and practices data collection and integration, data analysis and application, non-relational, distributed, HTAP, multi-mode, cloud deployment, etc., in an effort to achieve balanced development of different technology routes and product structures.

Risk warning: Xinchuang's progress falls short of expectations; technological progress falls short of expectations; channel sales risk; market competition intensifies.