Brief performance review

On October 29, 2024, the company released its three-quarter report. The first three quarters achieved revenue of 0.81 billion yuan, a year-on-year increase of 64.4%; net profit to mother was 0.12 billion yuan, an increase of 178.3% over the previous year.

Q3 achieved revenue of 0.28 billion yuan, a year-on-year increase of 77.0%; net profit to mother was 0.11 billion yuan, or -4.305 million yuan in the same period last year, turning a year-on-year loss into a profit.

Management analysis

The sharp increase in the company's revenue was mainly due to the company's merger and acquisition of 100% shares of Japan's Zhiming and ZhimingSoftware Holdings (BVI) in November 23, and the expansion of business scale. Nomura Research has promised to give Japan Tomoaki and BVI an order of at least 8.34 billion yen every year until March 2026 to provide an effective guarantee for the certainty of the company's performance.

At present, the company has successfully developed development tools such as automated development platforms, low-code development platforms, and Rakuraku test platforms. 24Q3 R&D investment has been reduced by 4.9% year-on-year.

Furthermore, as of Q3 '24, the yen exchange rate rose 0.7% from the same period last year, and the yen appreciated 9.2% in Q3, bringing exchange benefits to the company.

The company actively lays out domestic business, and the accumulation of experience can form a technical advantage in business with Japan.

The company won the bid for the China Securities Association Securities Industry Alliance Chain Innovation Project and the Shenzhen Stock Exchange Intelligent Label Measurement Service Project. In addition, the enterprise-level model base built by the company revolves around business directions such as listing review and code generation for specialized fields. It targets external audit scenarios such as pre-review of prospectus and issuance of sponsorship letters, legal opinions, and audit reports to expand the boundaries of innovation and reduce costs and increase efficiency. On October 24, the company signed a strategic cooperation agreement with Guotai Junan Securities. The two sides will explore ecological cooperation in the fields of big data and AI models.

Profit forecasting

According to the company's three-quarter report, we raised the company's 2024-2026 revenue forecast to 1.09/1.2/1.32 billion yuan, up 57.1%/9.9% year-on-year; the net profit forecast to mother was adjusted to 0.14/0.17/0.2 billion yuan, up 64.5%/19.8%/19.2% year over year, corresponding to 30.0x/25.1x/21.0x PE, respectively, to maintain the “buy” rating.

Risk warning

The risk of fluctuations in the yen exchange rate; the risk of loss of holdings by directors and supervisors; the risk of lifting the ban; the risk of international political risk or trade friction; the business integration of mergers and acquisitions falls short of expectations.