Incident: The company released its 2024 three-quarter report. 2024Q1-Q3 achieved revenue of 0.74 billion yuan, a year-on-year decrease of 34.76%; net profit loss to mother was 0.356 billion yuan, a year-on-year decrease of 9.98%, in line with market expectations.

Key points of investment

Single-quarter results were repaired month-on-month: 2024Q3 The company's revenue in a single quarter was 0.32 billion yuan, up 46.7% month-on-month; net profit loss to mother was 0.097 billion yuan, up 8.9% month-on-month, revenue increased significantly, and performance recovered month-on-month. We expect the company's performance to continue to improve as downstream customer repayments and project acceptance accelerate.

Overseas business continues to advance: Relying on the company's complete audio and video products and solutions, as well as successful experiences in new smart city construction, digital government construction, and industrial digital applications, the company and subsidiaries actively participate in safe cities and information technology construction in relevant overseas countries. During the reporting period, the subsidiary Suzhou Ketatong Technology Co., Ltd. signed a contract with a Ministry of the Interior for its domestic public safety integrated center construction project; the company signed a strategic cooperation agreement with Saudi N&B to plan the establishment of an intelligent manufacturing center in Saudi Arabia to jointly explore cooperation in the fields of smart cities, smart transportation, emergency command, smart education, and social security.

Focus on self-research and innovation to broaden new business growth space: The company continues to promote the application of big models in the field of security, and launched Keda digital image fusion solutions, using traditional comprehensive video image applications as a model, integrating data, images, and big model technology, and combined with actual public security services to achieve more than 100 kinds of practical police applications for customers, and has already implemented more than 200 projects in more than 20 provinces. According to IDC, Keda is the only self-developed video conferencing manufacturer in all categories in the industry. The company continues to innovate, further refine the cloud computing capability base and central platform capabilities, and continuously improve the GIS product system. By applying geographic information technology to the construction of new infrastructure, it provides decision support in the fields of urban governance, intelligent transportation, and emergency management, promotes digital transformation and intelligent upgrading in related fields, and empowers more innovative businesses. The company's related products and solutions have been successively applied by customers such as Daqing Petrochemical and Henan Water Resources.

Profit forecast and investment rating: Considering the company's continued increase in R&D investment, we expect the company's EPS to be -0.11/0.14/0.30 yuan in 2024-2026. We are optimistic that the company's performance will continue to recover in the context of AI support, overseas expansion, and acceleration of localization, and maintain a “buy” rating.

Risk warning: Policy progress falls short of expectations; industry competition intensifies.