China's leading insurance IT solution provider, 23Q1 Performance Recovery Xinzhi Software was founded in 1994 and is a leading software service provider in China. In December 2020, Xinzhi Software officially landed on the A-share Science and Technology Innovation Board. The company's main business includes providing technology services to financial institutions such as insurance companies, banks and other end customers in other industries, engaging in software development services including consulting planning, design, development, operation and maintenance, etc., and providing software project subcontracting services to first-level software contractors. Relying on more than 20 years of practical experience in serving the financial industry, and based on the R&D capabilities of the four basic laboratories of cloud computing, big data, artificial intelligence, and blockchain, the company provides financial customers with comprehensive information solutions including channels, core, data, management, etc., to meet the needs of financial customers to achieve intelligence, security compliance, and business diversification. It has occupied a leading position in the market share of IT solutions in China's insurance and banking industries for many years. The company's performance in 2022 was disrupted by the epidemic for a short period of time. 2023Q1 performance recovered significantly, achieving revenue of 317 million yuan, an increase of 24.75% over the previous year, and achieving net profit of 0.7 billion yuan to the mother, an increase of 101.36% over the previous year.
Combining the big model with insurance industry applications, the company started the second growth curve. The company began investing in research and development of generative AI-related technology in 2018, launched a novel knowledge map platform in 2022, completed the construction of 6 major map libraries including insurance index maps, insurance clause maps, and medical ICD10 infographics, connecting nearly 1 million nodes. The Xinzhi Knowledge Platform combines cognitive search with OpenAI services, integrating the platform's ability to index, understand, and retrieve fragments of its own data in a large knowledge base, as well as ChatGPT's impressive conversation ability to answer questions or take turns in multiple languages to form enterprise-level cognitive search, so that the enterprise's own data can be used as the basis for response. March 2023. The V1.2 version of Xinzhi Xinzhi upgrade was released, and the new version introduced “Xiaoxin Bot” by integrating ChatGPT. Using this robot, data and industry experts can quickly generate knowledge labels without additional pre-training, lower the threshold for industry knowledge labeling, bring great efficiency improvements to data knowledgeability, and bring users a better intelligent interactive experience. On the upper level application side, the company has deployed insurance knowledge robots to help customers quickly understand insurance, give insurance allocation suggestions for different situations, etc.
AI technology solves marketing channel pain points, and there is plenty of room for future imagination. Since the beginning of the year, the big model represented by ChatGPT has rapidly iterated and entered a multi-modal era. Judging from the progress of the industry, AIGC's multi-modal interaction function continues to evolve, laying the foundation for multi-scenario commercial use. We believe that the power of AI technology to the company's products is mainly reflected in two aspects: 1) internal cost reduction and efficiency, and the company focuses on improving efficiency and controlling costs through AI; 2) product upgrades. The big model can solve many pain points in the use of insurance channel software. Channel business combined with artificial intelligence is expected to bring new business models, such as AI+ customer service, AI+ sales, AI+ claims underwriting, etc., which is expected to lead to a reduction in labor costs in the channel business and intelligent insurance configuration consulting. The future has broad scope for imagination.
Investment advice and profit forecasting
The company's EPS for 2023-2025 is expected to be 0.52, 0.83, and 1.10 yuan respectively. The PE corresponding to the current stock price is 28.62, 17.98, and 13.55 times, respectively. The company is a leading insurance IT solution provider in China. It is actively exploring the integration of big models with insurance industry applications, and is expected to start a second growth curve. First coverage, giving a “buy” rating.
Risk warning:
AI technology iterations fall short of expectations; insurance IT demand falls short of expectations; market competition intensifies, etc.