Incident: The company achieved revenue of 382 million yuan in 2024Q1, +11.05% year on year, net profit of 76.7266 million yuan, +57.92% year-on-year, after deducting net profit of 72.9739 million yuan without return to mother, +57.03% year on year.

Mike's penetration rate has increased, and functions are expected to be further iterated. At the end of 2023, the number of Michael users was about 4,000, with annual payback of 20 million +, which is expected to be converted into revenue contributions in 2024. The number of 2024Q1 Michael users reached 4,641, and the penetration rate increased to 18.55% from 16.27% at the end of 2023. In 2023, Michael has launched functions such as multi-language translation, multi-modal processing (image processing, video digital human, AI music, subtitle dubbing), and automated workflow. In 2024, the company will 1) add simultaneous interpretation functions; 2) focus on expanding AI application scenarios, combining AI solutions with the “X business” and full-link services of China Manufacturing Network, including leading cloud website construction services, foreign trade customer management software and other enterprises that have already cooperated to deeply integrate AI solutions into customers' foreign trade business processes; 3 ) Expand the user base of AI applications to achieve broad penetration of the customer base.

China's foreign trade started strongly in the first quarter, and the company's main MIC business grew steadily. 2024Q1 China's total import and export value of goods trade was 10.17 trillion yuan, up 5.0% year on year. The import and export scale exceeded 10 trillion yuan for the first time in the same period in history, and the import and export growth rate hit a record high in 6 quarters. 2024Q1 The good start of China's foreign trade contributed to the expansion of the number of members of the Made in China Network. The number of paid members of the Made in China Network 2024Q1 was 25,018, an increase of 432 over the end of 2023. On April 1, 2024, China Manufacturing Network's annual large-scale procurement campaign super overseas season began. On the first day of the event, platform visits increased 163% year over year, and the number of buyers increased 183% year over year.

Investment advice: China's manufacturing network business is growing steadily. The company pioneered the launch of the AI assistant Michael for foreign trade B2B vertical scenarios in the industry, further strengthening its platform advantages. We expect the company's net profit to be 4.73/575/691 million yuan in 2024-2026, corresponding to PE21.7/17.9/14.9X, maintaining an “increase in holdings” rating.

Risk warning: The iterative results of AI products fell short of expectations, foreign trade exports fell short of expectations, and industry competition intensified.