Investment events: Recently, the company released its report for the third quarter of 2024. In the first three quarters of 2024, the company achieved operating income of 3.436 billion yuan, a year-on-year increase of 10.05%; net profit of 0.226 billion yuan, a year-on-year decrease of 9.34%; net profit after deducting non-attributable net profit of 0.221 billion yuan, a year-on-year decrease of 5.71%.

Revenue grew steadily, and net profit in a single quarter broke 100 million for the first time. In the first three quarters of 2024, the company achieved revenue of 3.436 billion yuan, up 10.05% year on year, of which software products and solutions increased 11.35% year on year. From a customer perspective, the company continues to further promote customer strategy development. Among them, the revenue of small and medium-sized banks increased 19.03% year on year, non-bank financial institutions increased 21.73% year on year, and non-financial institutions increased 32.57% year on year. The company achieved operating income of 1.192 billion yuan in the third quarter, up 8.47% year on year; net profit was 0.106 billion yuan, up 7.15% year on year; after deducting non-net profit of 0.103 billion yuan, up 8.51% year on year, net profit in a single quarter broke 100 million for the first time.

Cost control is good, and R&D is continuously being increased. In the first three quarters of 2024, the company's gross margin reached 22.61%. The company has good control at the cost side. In the first three quarters of 2024, the company's sales/management/ R&D expenses ratio was 1.69%/3.66%/9.21%, respectively.

Actively accelerate the innovation process and form an AI product matrix. Guided by the national Xinchuang Strategy, the company accelerated the Xinchuang process and was successively rated as “2024 Xinchuang Top 500” and “2024 Top 50 Financial Xinchuang Service Providers”. At the same time, the company continued to deploy AI and formed an AI product matrix. The self-developed AI large model service platform and series of scenario applications have fully transformed technical reserves in the field of artificial intelligence into new quality productivity.

Investment advice: Forecast that the company's revenue for 2024-2026 will be 4.771/5.417/6.202 billion yuan, and net profit to mother will be 0.411/0.49/0.59 billion yuan, respectively. The corresponding PE is 23/20/16 times, respectively, maintaining a “buy” rating.

Risk warning: Business development falls short of expectations, slow policy progress, untimely data updates, etc.