The company released its three-quarter report for 2024, with revenue of 0.301 billion yuan, up 38.00% year on year; net profit to mother was 0.036 billion yuan, up 161.91% year on year.

Revenue is growing rapidly. In the third quarter of 2024, the company's revenue was 0.115 billion yuan, an increase of 61.40% over the previous year. It was mainly due to batch production of some products by hosting customers, gradual trial production investment of new products, and additional revenue from the computing power service business. Suzhou Ruiying Intelligent Computing Technology Co., Ltd., a holding subsidiary of the company, is engaged in computing power-related business. Ruiying Intelligent Computing obtained a value-added telecom business license in July 2024 and purchased 62 domestic computing power GPU servers in September 2024. At the same time, Ruiying Intelligent Computing signed separate computing power rental service contracts with Beijing Urban Construction Intelligent Control Technology Co., Ltd. and Suzhou Ruixin Intelligent Technology Co., Ltd.

Equity incentives motivate employees. In July 2024, the company announced the 2024 Restricted Stock Incentive Plan (draft), which is exercised on the condition that the 24/25 revenue growth rate is not less than 35%/50%, or the 24/25 net profit growth rate is not less than 35%/50%. A total of 25 people are eligible for this incentive plan. The number of restricted shares is 2.9 million shares, and the grant price is 13.00 yuan/share.

The shareholding change begins the path of transformation. In September 2024, the company issued an indicative announcement regarding the controlling shareholder's agreement to transfer some of the company's shares and equity changes. The controlling shareholder will transfer 5% of the shares to Mr. Bai Bing and Mr. Xu Yinghui. The future cooperation model is mainly: Mr. Bai Bing and his team mainly provide photonic computing chip solutions, and Mr. Xu Yinghui is mainly responsible for the procurement, construction, maintenance, promotion and operation of supporting equipment for domestic computing power centers.

Investment advice: The company's main business is developing well and is actively moving in the direction of domestic computing power. The company's EPS for 24-26 is estimated to be 0.37\ 0.52\ 0.71 yuan respectively, covering the “buy” rating for the first time.

Risk warning: The transformation has fallen short of expectations; competition in the main business has intensified.