According to the Securities Times app, Haitong Securities released a research report stating that the outlook for the computer sector is expected to gradually improve. The revenue growth of the information services industry in 2024Q3 is stable, with improvements in profitability. In Q3 of 2024, the distribution of revenue growth shifted to the left, with profit showing a two-tier differentiation on a quarterly basis. In terms of profitability, both gross margin and net margin are generally declining, but gross margin shows a stabilizing trend, while R&D, sales, and management expense ratios are all increasing. When segmented by sector, data elements have high revenue growth, and the profitability of transformative technology sector shines. Based on market cap segmentation, the performance of high market cap companies in the first three quarters is stable, with improved profit growth in Q3.

The main points of Haitong Securities are as follows:

The revenue growth is stable, and Q3 saw an improvement in net income.

① In the first three quarters of 2024, the total revenue of the computer industry was 858.725 billion yuan, up by 5.72% year-on-year; the net income attributable to the parent company was 16.722 billion yuan, down by 29.80% year-on-year; and the non-GAAP net profit was 9.734 billion yuan, down by 27.79% year-on-year. In 2024Q3, the total revenue of the computer industry was 309.486 billion yuan, up by 3.11% year-on-year; the net income attributable to the parent company was 7.817 billion yuan, down by 3% year-on-year; and the non-GAAP net profit was 5.204 billion yuan, down by 15.39% year-on-year.

② The distribution of revenue growth shifted to the left in 2024Q3, with profit showing a two-tier differentiation on a quarterly basis. Based on the distribution pattern, 2024Q3 has shifted to the left compared to the first three quarters of 2024, indicating a slowing trend in revenue growth for the computer sector. Both net income and adjusted net profit show a two-tier differentiation status, with a large proportion of extremely high and low growth rates.

③ When segmented by quarter, the revenue growth in the first three quarters has stabilized overall, maintaining in the single-digit range, with a slight decrease in Q3, and profit growth approaching positivity.

In terms of profitability, the overall gross margin and net margin are declining, but the gross margin shows a stabilizing trend, while the research and development, sales, and management expense ratios are all increasing.

Contract liabilities + advances from customers continue to increase, with the growth rate stabilizing. Operating cash flow for 2024 Q1-Q3 has turned negative, and goodwill shows a downward trend.

Split by sector, cni data factor index revenue is experiencing high growth, and xgd inc. profit is impressive.

Ranked by revenue growth rate in 2024 Q1-Q3, the top five are cni data factor index, autonomous driving, industrial software, AI, cloud computing; ranked by attributable net income, the top five are xgd inc., industrial software, energy IT, autonomous driving, cni data factor index; ranked by non-GAAP net income, the top five are xgd inc., autonomous driving, industrial software, cni data factor index, cybersecurity.

xgd inc.'s performance has seen a double rise, with positive growth in both revenue and profit. In terms of basic software, with the advancement of the industry's innovation and the cessation of CentOS catalyzing, companies in the industry are accelerating the expansion of business in energy, government affairs, finance, and telecom sectors, optimizing revenue and customer structures further. In terms of basic hardware, China has established a favorable policy and industrial environment, and the integrated circuit industry has achieved improvement in both structure and scale. Leading companies in the industry have continuously enhanced product performance, with smooth progress in R&D projects and breakthroughs in key technologies such as high-end processor design and validation by the R&D team.

AI, autonomous driving, cni data factor index, industrial software, and energy IT performance show mixed results, presenting breakthroughs in products and technology overall, but downstream especially in B-end payment capabilities are weak, while costs remain rigid, resulting in insignificant profit growth.

cni xiangmi lake fintech index, cybersecurity, and medical IT are showing a dual decline in performance, mainly due to external environmental pressures and weak payment capabilities downstream.

The extreme low growth rate of attributable net income for medical IT is mainly due to the small absolute value in the previous period.

Split by market cap, large-cap companies performed steadily in the first three quarters, with improved profitability in Q3 among large-cap companies.

① Compared to mid and small-cap companies, large-cap companies in Q1-Q3 2024 showed robust performance. In 2024, Q1-Q3 large-cap companies with a market cap of over 10 billion had revenue, net income attributable to shareholders, and net profit excluding non-recurring items growth rates of 10%, -18%, -10%; mid-cap companies with a market cap of 5-10 billion had revenue, net income attributable to shareholders, and net profit excluding non-recurring items growth rates of -2%, -165%, -70%; small-cap companies with a market cap below 5 billion had revenue, net income attributable to shareholders, and net profit excluding non-recurring items growth rates of -14%, -72%, -31%.

② Profit growth improved for mid-cap companies in Q3 2024. In Q3 2024, large-cap companies with a market cap of over 10 billion had revenue, net income attributable to shareholders, and net profit excluding non-recurring items growth rates of 11%, -2%, -16%; mid-cap companies with a market cap of 5-10 billion had revenue, net income attributable to shareholders, and net profit excluding non-recurring items growth rates of -12%, 62%, 234%; small-cap companies with a market cap below 5 billion had revenue, net income attributable to shareholders, and net profit excluding non-recurring items growth rates of -23%, -39%, -6%.

Investment advice:

Fintech: Hundsun Technologies Inc. (600570.SH), Newland Digital Technology (000997.SZ), XGD Inc. (300130.SZ);

Fintech Sector: Hangzhou Hikvision Digital Technology (688041.SH), Changsha Jingjia Microelectronics (300474.SZ), Cambricon Technologies-U (688256.SH), Dameng Data (688692.SH), China National Software & Service (600536.SH), Ninestar Corporation (002180.SZ), Software Power (301236.SZ);

CNI Data Factor Index: Inesa Intelligent Tech Inc. (600602.SH), Fujian Boss Software Corp. (300525.SZ), Shanghai Ganglian E-Commerce Holdings (300226.SZ), New Point Software (688232.SH);

Intelligent Manufacturing: Zhejiang Supcon Technology Co., Ltd. (688777.SH), China Wisoft Technology (688083.SH);

Carcloud: Vanjee Technology (300552.SZ), Shenzhen Genvict Technologies (002869.SZ), Tongxingbao (301339.SZ);

Low-altitude economy: Laisi Information (688631.SH);

AI Applications: Beijing Kingsoft Office Software, Inc (688111.SH), Hangzhou Hikvision Digital Technology (002415.SZ).

Risk Warning: Performance sustainability lower than expected; Market fluctuations large; Economic recovery lower than expected.