Incident: The company released its 2024 three-quarter report. In the first three quarters, it achieved operating income of 0.897 billion yuan, net profit of -0.242 billion yuan, a year-on-year loss of 0.155 billion yuan; single Q3 revenue of 0.349 billion yuan, +18.08% of the year over year, net profit to mother -0.114 billion yuan; sales expense ratio/management expense rate/R&D expense ratio were 28.52%/27.11%/29.45%, sales Expenses/ Management Expenses/ R&D Expenses were +13.69/ -3.23/ -13.64%, respectively.

The electronic data forensics business maintains its leading edge, and big data for public safety actively explores new opportunities.

In 2023, China's electronic data forensics market surpassed 3.5 billion. The company's service targets expanded from administrative law enforcement departments such as public prosecution and municipal supervision, taxation, etc., to actively expand overseas markets and cooperate with the country's “Belt and Road” strategic fulcrum construction; the public safety big data market is expected to reach 16.66 billion yuan in 2023. The company's “Tianqing Public Safety Big Model Algorithm” passed the National Internet Information Office's in-depth synthesis service algorithm filing, becoming the first major public safety field in China to pass the filing Model algorithms.

The new business segment gained momentum rapidly, and the cybersecurity business won the bid for the airport project. In 2023, China's cybersecurity market was nearly 70 billion. The company was selected for the “2024 China's Top 20 Cybersecurity Companies” list and launched the digital network free version - the digital network data classification and grading tool officially launched; the “Data Outbound Security Consulting Service Platform” supporting the Xiamen Internet Information Office was officially launched; and won the bid for the information security inspection and service project for the construction of Fuxia Airport, marking an important achievement in the transportation industry. Enterprise digitalization: Promote the construction and optimization of key projects within the Group, such as integrated financial platforms, treasury systems, and smart legal affairs, and expand benchmark demonstration projects in industries such as smart mines, smart agriculture, and smart power plants externally.

In the AI field, AI has upgraded and released AI big model content inspection platforms and AI big model content inspection series products such as the “Insight Video Image Verification Workstation” to improve the support rate and accuracy of image video detection, traceability and authentication of deep falsification techniques, add detection and recognition capabilities for large model generated text, generative video, images, etc., and add the ability to evaluate the safety compliance of synthetic and generative AI content.

Profit forecast: The company's electronic data forensics and public safety big data cornerstone business is growing steadily, creating a new growth pole for digital government and enterprise digitalization and new cyberspace security. The company's net profit to mother is expected to be 0.116/0.141/0.172 billion yuan in 2024/2025/2026, giving it a “buy” rating.

Risk warning: Industry development, company business progress, profit forecasts and valuations fall short of expectations.