There are good card slots in industry data and scenarios, maintaining the “buy” rating company publishing the first quarter report of 2023, with operating income of 17.51 billion yuan, an increase of 12.7% over the previous year, net profit of 55 million yuan, an increase of 41.0% over the previous year, after deducting non-net profit of 37 million yuan, an increase of 0.65% over the previous year.
Compared with the 10.1% year-on-year decline in revenue in 22Q4, year-on-year growth in a single quarter changed from negative to positive. The company maintains a good card position in terms of industry data and scenarios. According to segmental valuation, industry data service revenue is estimated at 926 million yuan in 2023, with an average of 23E 9.6xps (Wind) for comparable companies, giving 23E 9.6xps; steel and silver e-commerce contributed 23E 182 million yuan in net profit to listed companies, and an average of 23E27.9XPE (Wind) for comparable companies, giving 23E 27.9XPE, with a target price of 52.12 yuan, maintaining the “buy” rating.
Industry data: Improve scenario service capabilities and focus on AI technology to empower AI technology. In the first quarter of 2023, the company's industrial data service business achieved revenue of 190 million yuan, an increase of 24.9% over the same period last year. Shandong Longzhong Information Technology Co., Ltd., an important subsidiary, achieved operating income of 39 million yuan, an increase of 65.7% over the same period last year, turning a loss into a profit. By strengthening the chain and repairing the chain, the company continues to provide the market with reliable benchmark prices and high-quality data services to enhance “Qianfan” scenario service capabilities. In addition, the company actively uses AI technology to empower data services: 1) labeling alternative data such as satellite remote sensing and shipping and cargo flow; 2) providing powerful search capabilities; 3) developing vertical models for the industry, and improving the company's content productivity and editorial staff's work efficiency through AIGC technology to improve service capabilities.
Trading services: Management capacity and operational efficiency have both increased. The daily transaction volume reached a record high in the first quarter of 2023. The settlement volume on the company's steel and silver platform was 108.727 million tons, an increase of 6.2% over the same period last year. On March 13, the platform's trading volume exceeded 410,000 tons in a single day, setting a record high in daily trading volume. The scale of supply chain business grew, and net cash flow from operating activities at the end of the first quarter was negative. Steel Bank e-commerce continues to focus on strategic goals, using improved system management and control capabilities and technological progress as a starting point. Through continuous investment, it maintains the advanced nature of the system and enhances the platform's risk control management capabilities and operational efficiency. Furthermore, in 2022, Steel and Silver Cloud SaaS products will fully launch a new stage of “customization” and actively lay out the ecosystem to help steel companies achieve digital transformation, which is expected to further promote the growth of transaction services.
The data collection/accumulation advantages of the entire industry chain are combined with AI technology to consolidate the data collection group team of nearly 3,000 people in the industrial position company, which can provide services for the entire commodity industry chain. In terms of information collection, multi-dimensional data spanning supply, circulation, and demand is combined with AI technology to develop alternative data values; in terms of data accumulation, the Steel Union Database has built 21 major databases, more than 150 segmented databases, involving more than 80,000 types of segmented varieties. Under the trend of migration from the basic big model to the big model of the industry, the company provided implementation scenarios for various aspects such as data collection, processing, and application, which is expected to benefit from the promotion of big language model technology and further consolidate the position of the industry.
Risk warning: The risk that the expansion of industrial data services is lower than expected, and the risk that e-commerce transaction volume of steel and silver will decline.