Incident Overview: In order to thoroughly implement the spirit of the Third Plenary Session of the 20th CPC Central Committee, deepen party building leadership, and promote cooperation and exchanges, the signing ceremony for party building co-building and strategic cooperation between Shanghai Trading Group and CLP Digital Technology Group (hereinafter referred to as “Electronics Digital”) was held at Telecom Digital (32) on the morning of October 29.

The first three quarters saw a double increase in revenue and profit. In the first three quarters of 2024, the company's total revenue was 7.1 billion yuan, up 2.49% year on year, and net profit to mother was 0.302 billion yuan, up 8.76% year on year. According to single-quarter data, total revenue for the third quarter was 2.587 billion yuan, down 3.07% year on year, and net profit to mother for the third quarter was 0.169 billion yuan, up 15.38% year on year. As of September 30, 2024, Telecom's digital accounts receivable were approximately $2.058 billion, an increase of 11.63% over the previous year.

The digitalization of the industry is making more efforts, and the financial data for the third quarter performed well. In the first three quarters of 2024, the company achieved gross profit margin of 19.54%, net interest rate of 4.3%, total sales expenses, management expenses and financial expenses of 0.733 billion yuan. The three fees accounted for 10.32% of revenue, 6.64 yuan per share of net assets, up 8.11% year on year, operating cash flow of -1.8 yuan per share, down 17.29% year on year, and earnings per share of 0.44 yuan, up 8.06% year on year. Various indicators showed a steady year-on-year increase, and overall financial data was improving.

CLP Digital Technology Group and Shanghai Trading Group signed a joint party building and strategic cooperation agreement. At this party building co-building and strategic cooperation signing ceremony, the company emphasized actively promoting the construction of a unified, standardized, and efficient market for factors and resources. In order to fully achieve the Group's reform and development goals, we are committed to building a safer, more convenient and more efficient high-level trading platform to provide quality services to various market players. We hope to use this signing as an opportunity to further broaden the areas of cooperation, enhance the effectiveness of joint construction, and carry out all-round cooperation in various fields such as party building, digital technology application, property rights trading, data resource value mining, financial technology innovation, etc., to jointly set an industry benchmark and create a new situation of high-quality development.

Investment advice: As a leading domestic digital solution provider for the industry, the company continues to build a “1+2+N” digital architecture system for the industry. We expect the company's 2024-2026 revenue to be 11.237, 12.752, 14.653 billion yuan, net profit due to mother 0.583, 0.641, 0.71 billion yuan, EPS 0.85, 0.94, 1.04 yuan, corresponding PE of 28, 25, and 23 times, maintaining the “recommended” rating.

Risk warning: Policy implementation progress falls short of expectations; industry competition may intensify.