Event Overview: On October 25, 2024, the company released its 2024 three-quarter report. The company achieved operating income of 1.21 billion yuan in the first three quarters, up 10.72% year on year; net profit to mother was 0.195 billion yuan, down 36.36% year on year; net profit after deducting non-return to mother was 0.185 billion yuan, up 1.04% year on year.

Revenue grew steadily in the third quarter, and further localization was carried out to create high-quality Hongmeng applications. 1) The company's 2024Q3 revenue was 0.429 billion yuan, a year-on-year increase of 19.26%. The revenue side increased steadily, and the 2024Q3 revenue growth rate was higher than in the previous two quarters (2024Q1 and 2024Q2 revenue growth rates were 10.64% and 2.01%, respectively), indicating that the company's business is maintaining a healthy development trend. 2) As an important ISV partner of Huawei, the company cooperated with an operator to develop a Hongmeng app project for a mobile phone business office in early 2024. The app has been launched on the Huawei App Store, providing users in all provinces with unified online service capabilities such as payment inquiries and business processing.

AI applications are deeply cultivated, and various points such as Color Spirit, computing power, and Rich AIBox are making full use of the layout. 1) Clarion: Tucson Music AI application. It was first launched and publicly tested in October 2024. It is built on next-generation multi-modal large model technology, incorporating leading technologies such as Fourier transform, sentiment calculation and sentiment design, text analysis and generation, and cutting-edge AI algorithms. By uploading any photo or entering a text, users can generate an exclusive song with one click. 2) Rich AIBox: A powerful engine for one-stop AI application development. Typical applications of RichaiBox include applications such as Rich M @il AI email and digital employees. It has provided self-service consulting services for industry workers, enterprises and citizens at real estate registration centers, implemented content generation and intelligent search functions in cloud disk AI upgrades, and built 11 typical marketing service scenario applications in operator companies' WeChat AI upgrade projects. 3) “5G New Call” full-scene AIGC application: AI technology reshapes the call experience. The company has launched a series of “5G New Call” full-scenario AIGC applications for C-end consumers, including multimedia digital people, AI smart dance, AI call business cards, AI call secretaries, etc., using AI technology to reshape the call experience. 4) In terms of computing power: The company launched an AI native cloud computing solution, which integrates AI computing power construction and large model operation integration solutions for next-generation AI native cloud computing network architectures, hyperscale computing power cluster management platforms, and high-performance large model training and promotion platforms. The aim is to help enterprises quickly build large-scale computing power clusters and deploy large models exclusive to operation. The bottom layer of Rich AICloud is RichNet's next-generation AI native cloud computing architecture. The middle layer is the RichMOSS hyperscale computing power cluster management platform that can manage 10,000 card clusters, and the top layer is the RichBoost high-performance large model training and promotion platform. According to the company's official account, in the past two years, AIBoost has deployed a total of over 10,000 GPU cards with 90% GPU computing power clusters, including 1 10,000 card cluster and more than 3 kilocar clusters.

Investment advice: The company is a leader in the domestic email field. In the context of the AI-driven new technological revolution, the company uses AI to drive traditional business upgrades, and AI email and other products are expected to accelerate the company's AI layout. The estimated net profit for 2024-2026 is 3.47/4.05/4.88 yuan, respectively, and the corresponding PE is 27X, 23X, and 19X, respectively, maintaining the “recommended” rating.

Risk warning: The development process of new products such as AI falls short of expectations; the risk of increased competition in the industry.