Incident Overview

The company released its three-quarter report for 2024. In the first three quarters, it achieved revenue of 2.33 billion yuan, a year-on-year decrease of 1.6%; realized net profit due to mother of 0.65 billion yuan, a year-on-year decrease of 15.5%; and realized net profit deducted from non-mother of 0.63 billion yuan, a year-on-year decrease of 16.7%.

Q3 alone achieved operating income of 0.95 billion yuan, a year-on-year increase of 4.8%; realized net profit of 0.29 billion yuan, a year-on-year decrease of 7.5%; realized net profit deducted from non-mother of 0.29 billion yuan, a year-on-year decrease of 7.3%.

Increased cost ratios put pressure on profits

1) The comprehensive gross profit margin was 85.7%, down 2.4 percentage points from the previous year, or related to changes in revenue structure and gross margin by business.

2) The sales expense ratio, management expense ratio, and R&D expense ratio were 17.0%, 7.5%, and 37.9%, respectively, an increase of 3.0 percentage points.

3) Net cash flow from operating activities was 0.65 billion yuan, a year-on-year decrease of 12.6%.

Since the end of September, the recovery in the capital market is expected to drive up demand for financial information services. Since the end of September, the capital market has continued to pick up. The full-day turnover on October 8 was close to 3.5 percent.

As the capital market recovers, it is expected to drive demand for financial information services. As a result, data such as paid users of the Tonghuashun Online Market Client is expected to pick up, driving the company's performance growth.

Investment advice

We believe that the recovery in the capital market has a direct beneficial effect on the company, and the fourth quarter results are expected to pick up compared to the third quarter. Maintaining the previous profit forecast, the company is expected to achieve revenue of 3.67/4.1/4.63 billion yuan in 2024-2026, up 3%/12%/13% year on year, and achieve net profit to mother of 1.45/1.64/1.86 billion yuan, up 3%/13%/14% year over year, maintaining a “buy” rating.

Risk warning

1) Downstream demand falls short of expectations; 2) R&D breakthroughs fall short of expectations; 3) Market expansion falls short of expectations; 4) Overseas business policy risks.