Incidents:

The company released the “2023 Semi-Annual Report” on August 27, 2023.

Comment:

Revenue has grown rapidly, and business geography continues to expand

In the first half of 2023, the company achieved operating income of 519 million yuan, an increase of 22.70% over the previous year, and achieved net profit of 85 million yuan, an increase of 5.10% over the previous year. Among them, medical insurance business revenue was 232 million yuan, up 4.01% year on year; smart city and digital government business revenue was 260 million yuan, up 47.88% year on year. By product, software business revenue was 302 million yuan, up 24.33% year on year; operation and maintenance service revenue was 175 million yuan, up 24.77% year on year. The company's revenue growth in the first half of the year was mainly due to revenue growth in the smart city and digital government industry. Among them, revenue from software and operation and maintenance services in the digital government industry increased significantly, mainly in the southwest, northeast, south China, and central China regions.

Deeply cultivate medical insurance business and empower health insurance data elements

In the first half of 2023, the company fully supported the operation and maintenance of health insurance information platforms in 23 provinces across the country to ensure the stable and efficient operation of the platforms. Focusing on national health insurance “two combined with three empowers” and “three electronic and two payments”

Policy requirements, with health insurance data elements and health insurance convenience services as the core, in more than 100 cities across the country, more than 200,000 health insurance institutions continue to deeply cultivate the health insurance market and innovate health insurance services. The company is actively building a medical insurance data zone to help health insurance users develop comprehensive data governance and data services. Actively carry out capitalization, commercialization, and service innovation of health insurance data elements to empower health insurance management, health insurance reform, and health insurance services. The company's “Hospital Disease Diagnosis and Treatment Path Knowledge Base and Medical Expense Analysis System” is the first batch of data capabilities to be listed on the Guangzhou Data Exchange, making the valualization of data elements a new driving force for “integration of digital reality”.

Continue to increase R&D investment and launch artificial intelligence products

In the first half of 2023, the company continued to increase investment in technology research and development. The total R&D investment reached 122 million yuan, an increase of 9.48% over the previous year. In terms of artificial intelligence, the company's “Insight Artificial Intelligence Industry Application Platform” is committed to implementing application scenarios of artificial intelligence capabilities in the fields of healthcare and smart cities. At present, it has low-level technology research and development capabilities in the fields of machine vision, natural language, etc., and has completed the development and application of AI technology in face recognition, OCR, image recognition, video understanding, natural language processing, knowledge mapping, etc., and has incubated AI products in clinical fields such as medical image recognition, clinical assisted decision-making, and intelligent medical order management through cooperation with the top three hospitals. In terms of cloud computing, the company's “Yinhai Cloud Platform” provides users with a complete set of solutions and related cloud platform products from IaaS and PaaS to SaaS, provides customers with a secure and agile private cloud environment, and helps customers achieve the goals of cloud computing and cloud-native capacity building.

Profit forecasting and investment advice

The company focuses on the three strategic directions of health insurance, digital government, and smart cities to help the “Healthy China” campaign and the construction of a “digital China”. There is broad room for future growth. The company's operating income for 2023-2025 is estimated to be 1,598, 19.13, and 2,270 million yuan, net profit to parent is 251, 3.14, and 385 million yuan, EPS is 0.62, 0.77, and 0.94 yuan/share, and corresponding PE is 49.71, 39.81, and 32.44 times.

Maintain a “buy” rating considering the prosperity of the industry and the company's continued growth in the future.

Risk warning

Market risk; technical risk; risk of rising operating costs; risk of falling fees for operation and maintenance services; risk of industry policy changes; management risk brought about by rapid development; human resources risk.