23H1 minus non-attributable net profit +128%, maintaining the “buy” rating

Neusoft Group released its semi-annual report. 23H1 achieved revenue of 3.890 billion yuan (yoy +14.98%), net profit of 95.06 million yuan (yoy +14.50%), net profit of 27.17 million yuan (yoy +128.04%) after deducting non-net profit of 27.17 million yuan (yoy +128.04%). Among them, Q2 achieved revenue of 2,233 million yuan (yoy +6.12%, qoq +34.83%) and net profit of 90.1 million yuan (yoy -20.46%, qoq +1679.15%). Considering the slow recovery of downstream demand in 23H1 and lowering the profit forecast, it is estimated that the company's net profit for 23-25 was 369/528/648 million yuan, respectively (previous value was 4.2/62/770 million yuan). Segment valuation, 23E smart car business net profit of 179 million yuan, other business net profit of 190 million yuan. Referring to the average value of 23PE for comparable companies, 44.6x/40.0x 23PE was given to smart cars/other businesses. The target price was 12.84 yuan (previous value of 14.2 yuan) to maintain “purchase”.

Smart cars: 23H1 revenue increased by 18.89%, orders continued to be released, and the capacity industry led 23H1 smart car business revenue of 1,608 billion yuan, an increase of 18.89% over the previous year. 1) Shipments continue to increase: Neusoft 23H1 continues to receive targeted orders from car manufacturers such as BYD, Geely, Changan, FAW, SAIC Motor, Great Wall, Zero Sport, and Audi, and overall shipments continue to increase. 2) Leading capacity: According to advanced automotive data, Neusoft ranks first among domestic manufacturers in the passenger car smart cockpit (single-chip) domain controller front-mounted (single-chip) domain controller market share, and the passenger car front-mounted (domestic) in-vehicle wireless terminal (network function) tier 1 standard capacity. 3) Accelerated product upgrades: The market recognition of the 2023H1 Neusoft ALFUS cockpit domain control software platform continues to increase, and the C5 human-computer interaction platform has entered the mass production and development stage; Neusoft's NAGIVI global IVI platform has been upgraded to version 2.0, and has quickly received designation from well-known overseas car manufacturers.

Healthcare & Social Security IT: 23H1 revenue increased 35.65%, and the value of health insurance data elements highlighted 23H1. Healthcare and social security business revenue was 752 million yuan, an increase of 35.65% over the previous year. 1) Medical IT: 23H1 has undertaken a number of smart hospital informatization construction projects covering HIS, electronic medical records, clinical, critical care, etc., including more than 10 million projects; 23 H1 has helped 16 additional hospital customers, and has helped 51 hospital customers pass the high-level (level 5 and above) evaluation of the functional application level of the national electronic medical record system, and continues to rank first in the industry. 2) Health insurance IT: 23H1 has made every effort to promote the acceptance process of local health insurance platforms. The 24 provincial health insurance platforms participating in the construction have all passed the inspection by the Health Insurance Administration. 23H1 is deeply involved in the national platform and health insurance data management work in Hainan, Inner Mongolia, Suzhou, Nantong and other provinces and cities, helping to fully exploit the value of national health insurance data elements.

Smart cars+medical IT are growing steadily, and we are optimistic about the long-term business space 23H1. The company's smart car and medical IT businesses are growing steadily, with revenue growth of 18.89% and 35.65% respectively. We believe that under new industrial changes such as the acceleration of automobile independent brands going overseas and the successive introduction of data element policies, the company's core business is expected to accelerate growth, and the long-term space is broad. Considering the slow recovery of downstream demand in 23H1 and lowering the profit forecast, net profit for 23-25 is estimated to be 369/528/648 million yuan.

Risk warning: The intelligent driving industry has fallen short of expectations; subsidiary business has dragged down more than expected.