In the first three quarters of 2024, the company achieved revenue of 3.169 billion yuan, an increase of 13.01%; net profit to mother of 0.11 billion yuan, an increase of 30.15%; net profit of 0.104 billion yuan after deducting non-attributable net profit of 0.104 billion yuan, an increase of 46.03%. Net cash flow from operating activities - $-0.114 billion.

The increase in fee control efficiency continues to be reflected, and the quality of revenue has improved. In the first three quarters, the company's gross margin was 19.53%, down 2.84pct. Sales/management/R&D expenses were 2.24%/8.41%/4.15%, respectively, and reduced by 0.52 pct/0.68 pct/1.35 pct, continuing to drive cost reduction and efficiency. Despite pressure on gross margin, the company's net profit margin for the first three quarters was 3.47%, up 0.46pct year over year. Net income from operating activities was 93.25% compared to total profit, an increase of 16.59pct over the previous year.

The growth potential of smart cockpits continues to show. The Internet and financial industries are the basic revenue markets for companies, and the automotive, energy, and communications industries contribute more growth flexibility to French information. Legal Information's automotive software development capabilities have passed CMMI L5 certification by the US SEI agency. On October 24, French Information won the Golden Series “Best Technology Practice Application Award” hosted by Geshe Auto for the “Domestic SoC Smart Cockpit Domain Control Platform”. The company's smart cockpit solutions are based on domestic SoCs, MCUs, SerDes, WIFI/BT, 4G modules, GPS modules, etc., and have high safety, autonomy and cost performance, and are used in cockpit scenarios such as driving, entertainment, and monitoring. The company's current customers include Ideal Auto, Geely, SAIC Motor, Xiaopeng Motors, Desai Xiwei, etc. In October 2024, the company and FAW of China reached a preliminary cooperation agreement on the “China FAW Greater Bay Area R&D Institute Talent Innovation Service Cooperation”. Further cooperation on technological innovation and talent is expected in the future.

Continue to embrace the Hongmeng ecosystem and explore the needs of the native application development market. Legal information is one of the first diamond-grade service providers of Hongmeng Ecology in China, and continues to invest. The company can provide customers with end-to-end Hongmeng native application development and porting services from plan formulation, cost evaluation, and delivery plan formulation to software development, testing and acceptance, and operation and maintenance. The FarData big data platform was certified by Kunpeng Cloud Technology and officially joined the HUAWEI CLOUD “Fertile Land Cloud Innovation” program. In the field of smart driving in Hongmeng, legal information can provide in-depth customized scenario-based applications and Hongmeng app application development services. In the communications field, Hongmeng's application development and migration services have been recognized by operator customers. In October 2024, Faben Information held a Hongmeng Native Application Cooperation and Exchange Conference, bringing together talents from Huawei, Migu, Shanghai China Mobile Information, Shanghai Unicom Industrial Exchange, and many leading enterprises in the industry. Faben Information signed ecological strategic partnership agreements with many well-known enterprises. In terms of talent reserves, in September 2024, Faben Information signed a cooperation agreement with Hongmeng Ecological Service Company to develop deeper cooperation in attracting industrial talents and promoting Hongmeng's industrial ecological construction.

Profit forecast and investment advice: The company's revenue for 2024-2026 is estimated to be 4.62/5.71/6.863 billion yuan, up 18.93%/23.59%/20.20% year-on-year, and realized net profit to mother of 0.179/0.275/0.365 billion yuan, up 58.66%/53.63%/32.50% year over year, corresponding EPS of 0.42/0.64/0.85 yuan, PE is 64.92/42.25/31.89 times. Maintain a “Recommended” rating.

Risk warning: the risk of macroeconomic fluctuations, the risk of bad debts in accounts receivable, the risk of rising labor costs, the risk of talent introduction and loss, and the risk of increased industry competition.