Overview of events:

Recently, Digital Zhengtong issued a "notice on the recent business situation" (hereinafter referred to as the "announcement"). According to preliminary estimates, in the first half of 2023, the company's operating income and profits averagely reached new highs in the same period, and the gross profit margin of newly signed orders increased steadily. It is expected that the company's operating performance will continue to maintain a good growth trend from half a year to the whole year.

The leading advantage of "one network management" is remarkable, which empowers social governance.

One network management platform is not only the core platform of digital government and smart city construction, but also an important platform to promote the modernization of urban governance system and governance ability. it has become a rigid demand for governments at all levels to promote urban governance system. Digital Zhengtong is the first system development unit of the new digital urban management platform in the country. it has strong technical strength and rich implementation experience in the field of network management business, and is in a dominant position in the industry.

According to the annual report, the company maintains the first market share in the national gridded city management big data integrated operation service market. It has successfully built more than 5000 smart city-related construction projects for more than 1000 districts (counties) and more than 1000 districts (counties), including Beijing, Shanghai, Tianjin, Chongqing and Guangzhou, serving more than 550 million people. The area of urban built-up areas serving the country is more than 70%. The company has undertaken more than 100 one-network management projects in Beijing, Yantai City, Shenzhen Pingshan District, Hefei Baohe District, Yantai Fushan District, Jinan start area, Zibo Zhangdian District and so on. According to the company announcement, the company's orders related to "one-network management" increased significantly in 2022, more than three times higher than the same period last year; in the first quarter of 2023, the company was following more than 150 projects of various levels and one-network management, and the revenue of one-network management business increased significantly compared with the same period last year.

Transportation management service platform + city lifeline business helps smart city

In April this year, the Ministry of Housing and Urban-Rural Development organized a video promotion meeting on the construction of urban transportation management service platform system and strengthening the overall planning and coordination of urban management. The meeting called on urban management departments at all levels to promote the work mode of "one committee, one office, one platform", do a good job in the examination and evaluation of the technical plans of the platform, and create a demonstration model that is useful in actual combat, is loved by grass-roots cadres, and is felt by the masses. The construction of urban operation management service platform has become a key information construction task for governments at all levels in recent years, showing a good trend of rapid construction and national popularization. in the future, it is expected to cover nearly 300 cities at or above prefecture level and more than 2800 counties (cities and districts).

According to the announcement, the company has established operation and management service platform contracts in more than 70 cities in the first half of 2023, including three provincial platforms in Fujian, Yunnan and Liaoning and five provincial capital city platforms in Nanjing, Shenyang, Changsha, Lanzhou and Nanchang. At present, the company undertakes the construction of provincial and municipal platforms with a market share of more than 85%, and cities at prefectural level and above have a market share of more than 70%. Among them, the Qingdao and Hangzhou urban operation management service platforms undertaken by the company were first checked and accepted by the Ministry of Housing and Urban-Rural Development. At present, the Qingdao urban operation management service platform handles more than 20,000 urban operation management service problems per day, and the disposal rate is maintained at more than 99%.

In areas related to urban safe operation, such as water supply and gas supply, underground pipelines, flood control and waterlogging, the company has opened up urban lifeline business and created a new urban safe operation mode with the combination of "monitoring, early warning and source control". To provide technical services for urban safety supervision work, such as general survey and detection of urban municipal infrastructure information, hidden danger investigation, comprehensive monitoring, source control, safety supervision and so on. Comprehensively and systematically improve the standardized and intelligent management of urban infrastructure. In the first half of 2023, the company has carried out special management work to support urban lifeline business in many cities across the country.

The self-driving grid car is on the road to build a large model of government affairs.

The company's "Qiji" unmanned grid car, with "self-driving + AIoT" technology as the core, has a complete L4 self-driving ability, and is the first grid car in China to apply self-driving technology.

According to the announcement, in the first half of 2023, Qiji self-driving car has achieved the landing of a low-speed self-driving business scene of urban operation and data element collection, creating a more efficient, objective and three-dimensional urban perception system. The construction of unmanned intelligent collection, non-contact law enforcement, grass-roots patrol services and other urban governance scene application services have been implemented and put into use in Hefei, Tianjin, Wenzhou and other cities. The cumulative mileage of unmanned inspection has exceeded 50, 000 kilometers, more than 100000 data files have been identified, and there are no accidents in safe operation.

According to the announcement, in the first half of 2023, according to the needs of customers, the company is developing "Renhe" large model products with independent intellectual property rights. at present, the big model has completed three rounds of pre-training of government data in the government knowledge base, intelligent report on urban governance, penalty discretion, legal basis, government affairs hotline intelligent assistant, government affairs hotline digital people, government affairs hotline early warning and other scenarios to carry out product research and development. The company also cooperates with BABA and other domestic well-known large model enterprises to achieve resource sharing and complementary advantages, and provide users with more high-quality products and services.

The National data Bureau is established, and the elements of government data are expected to release value.

Data element is an important engine of the development of digital economy. At present, the data element market has entered a stage of rapid development. The "Plan for the Reform of Party and State institutions" announced in March this year clearly proposes the establishment of a State data Bureau. As an important producer, administrator and user of e-government data elements, the company has been expanding the breadth and depth of data management requirements, deeply digging data value, combing, cleaning, integrating and applying existing data contents. form data assets for urban operation and management, and actively explore new value models for the application of data assets, guided by solving the problems and problems of urban livelihood and management. Promote the innovation of data management from the root, empower the development of digital governance and digital economy.

According to the announcement, in the first quarter of 2023, the company has carried out e-government data collection and operation services in more than 100 cities across the country, and successively landed data analysis and operation and maintenance service projects in Wuhan. For urban governance industry-wide data aggregation, governance, analysis, maintenance, suggestions, etc., normalized output analysis report and business model recommendations Promote the full application mode of intelligent collection with the combination of man and machine in Xuzhou, promote the coordination of human technology, expand the scope of collection services and data fields, improve the efficiency of collection, ensure the unity of standards, and the objectivity and fairness of data, in order to support the application of data analysis, modeling and essential development. With the appointment of the first director after the establishment of the National data Bureau, we believe that the development of the data factor industry is expected to accelerate, and the company as the core target of government data elements will benefit significantly.

Investment suggestion

Digital Zhengtong is not only the industry leader of "one network management" and urban operation management, but also the core target of government data elements. It is estimated that the company's operating income from 2023 to 2025 is 2.749 billion yuan, respectively, and the net profit is 342 million, 415 million yuan, respectively.

For the first time, it covers the investment rating of Buy-A, with a six-month target price of 26.76 yuan, equivalent to a dynamic price-to-earnings ratio of 40 times in 2024.

Risk Tips:

The promotion of data factor policy is not as expected, the demand of downstream customers is not as expected, and the market competition aggravates the risk.