Revenue is growing steadily, and the AI product matrix continues to improve

In 2024, the company continued to adhere to the development strategy of “fully embracing artificial intelligence”. In the first three quarters, the total operating income was 1.384 billion yuan, up 23.50% year on year; net profit to mother was 0.032 billion yuan, down 26.47% year on year, mainly due to equity incentive costs and interest on debt conversion, and increased investment in AI applications and computing infrastructure marketing channels. Sales expenses increased 62.91% year on year in the third quarter. Considering that the acceptance of some of the company's projects was concentrated in the fourth quarter and the implementation of AI products, the company's performance is expected to grow rapidly throughout the year.

The company actively promotes the application of large models of artificial intelligence in the industry, and uses the “Innovative and Innovative Artificial Intelligence Platform” as the core foundation to launch robots for various industries. In the financial sector, the company relies on the existing ACE product line and focuses on key applications such as product interpretation, product verification, intelligent underwriting, claims assistance, and intelligent matching. In the field of enterprise services, the company focuses on case searches and file generation in the field of government affairs, as well as innovative applications such as “marketing smart business cards” in the automotive field. From a product perspective, the company's automotive artificial intelligence product “marketing smart business card” has been deployed in more than 100 4S stores.

Actively seek external cooperation and join hands with Haiguang to build AI digital intelligence solutions. While using AIGC to upgrade the company's various software products, the company actively establishes a more complete cooperation mechanism with external software and hardware vendors and large model manufacturers, integrates and encapsulates the company's product capabilities and partner products, and launches new training to promote all-in-one computers, so that industry customers can use all-in-one computers to quickly deploy training, continuously iterate, and build a complete independent knowledge base of the enterprise on this basis.

On December 3, 2024, the company and Haiguang Information held a signing ceremony. The two sides announced that they will jointly build digital intelligence solutions based on AI big model technology to help enterprises achieve more efficient and intelligent operation and development. Xinzhi Software and Haiguang have deep accumulation and rich experience in the field of AI large model technology. This cooperation will give full play to the advantages and strengths of both parties and jointly promote the process of digital intelligence transformation. The two sides will jointly create a series of digital intelligence solutions based on AI big model technology, and promote and apply them to the global market. In addition, Xinzhi Software will also establish a long-term and stable strategic partnership with Haiguang to jointly promote the widespread application and further development of artificial intelligence technology throughout society.

Increased issuance of actual controllers enhances confidence, and the equity structure is further stabilized

On October 8, the company issued the “2024 Plan to Issue A Shares to Specific Targets”. The issuance target is Mr. Guo Wei, the actual controller of the company, and Qian Yao Jia Sheng. The issuance price is set at 9.63 yuan/share, and the total amount of capital to be raised does not exceed 0.3 billion yuan. After deducting the issuance fee, all of the actual net capital raised will be used to supplement working capital and repay loans. We believe that this additional issue fully demonstrates the determination of the actual controller to support the company and their firm confidence in the company's future development, and is conducive to ensuring the continuous, stable and healthy development of the company's operations.

Investment advice and profit forecasting

The company's 2024-2026 EPS is expected to be 0.52, 0.68, and 0.89 yuan, respectively, and the PE corresponding to the current stock price is 34.40, 25.99, and 19.95 times, respectively. The company is a leading provider of insurance IT solutions in China. It is actively exploring the integration of large models with applications in insurance, automotive, retail and other industries, and is expected to start a second growth curve and maintain a “buy” rating.

Risk warning

AI technology iterations fall short of expectations; demand for insurance IT falls short of expectations; market competition intensifies, etc.