Incident: The company released its three-quarter report for 2024, with revenue of 2.445 billion yuan, a year-on-year decrease of 15.53%; net profit to mother was 0.297 billion yuan, a year-on-year decrease of 46.18%.

Gross margin increased significantly, and taxation affected profit performance. In the first three quarters of 2024, the company's gross margin was 41.99%, up 5.25 percentage points from the same period last year. The reason for the decline in net profit was that Jialian Pay, a wholly-owned subsidiary of the company, discovered that tax-related matters needed to be adjusted in previous years, and all related taxes and late fees had to be paid a total of 0.362 billion yuan. Based on the principle of prudence, the company included the above related taxes and late payment fees in the current period, affecting the company's net profit of -325.0247 million yuan attributable to shareholders of listed companies in 2024, and jointly announced “Meet the King of Code Scanners” with Alipay. “Touch it” is a payment feature launched by Alipay in July 2024. Users can complete the payment by opening NFC and touching the Alipay payment device to go to the payment confirmation page. The cashier device jointly launched by the company and Alipay allows you to instantly receive payments by touching the device with a mobile phone. The product has many functions such as intelligent reconciliation and hormone payment collection.

Continue to expand the AI business. The formula co-funded the establishment of Shanghai Shuyi District Information Technology Co., Ltd., and has now successfully released the first AI “digital employee” product. Through the import and training of enterprise data, this product can generate “digital employees” with different functions according to the requirements of each enterprise management module, and is currently in the commercialization stage.

Investment advice: The company's performance remains stable, and overseas and innovative businesses continue to grow. The company's EPS is expected to be 1.01\ 1.82\ 2.28 yuan in 2024-2026, respectively, maintaining a “buy” rating.

Risk warning: Competition in the billing business intensifies; AI applications fall short of expectations; industry competition intensifies.