Key points of investment

On July 30, the company issued a voluntary disclosure notice for the 2024 semi-annual results forecast. According to preliminary accounting, 24H1 is expected to achieve revenue of 0.776 billion yuan, a year-on-year decrease of 14.94%; net profit due to mother of 26.8499 million yuan to -17.9 million yuan, with a loss margin of 68.22% to 78.81% year-on-year; and expected to achieve net profit deducted from mother - 87.6174 million yuan to -58.4116 million yuan. The loss margin decreased by 42.20% to 61.47% year on year.

Gross margin continued to rise, cost reduction and cost control showed results, and the quality of operations continued to improve. During the reporting period, due to factors such as tight customer budgets, extended project approval cycles, and delivery and acceptance delays for some projects, the company's revenue fell 14.94% year on year, and 24Q1 company's revenue fell 14.92% year on year. Overall, the company's H1 revenue growth rate was consistent with Q1.

However, the company continues to develop innovative products and services to increase the added value of products. On the basis of the Q1 gross margin increase of 5.36 pcts year on year, 24H1's gross margin still increased by about 5 percentage points year on year, maintaining a good trend of increasing gross margin.

In the first half of the year, the company's management strengthened the control of various costs and expenses through digital means, continuously optimized processes, reduced labor costs, improved quality and labor efficiency, and effectively achieved a drastic reduction in losses. At the same time, the company adopted a series of measures to strengthen the management of accounts receivable. In the first half of the year, it achieved revenue of 0.942 billion yuan, and the net cash flow from operating activities was superior to the same period last year.

New business technology continues to expand and accelerate the transformation and upgrading of business models. During the reporting period, the company firmly implemented the established strategy to expand enterprise customers, create a new circuit for enterprise electronic procurement bidding; continuously promote the application and scenario implementation of AI models in industry segments to enhance the company's technical competitiveness and continuous innovation; build a data element operation platform to achieve intelligent governance, commercialization and commercial application of various data elements; explore a SaaS operating model based on competency-based services and data elements based on the AI big model to achieve the transformation and upgrading of the business model.

Investment advice: Considering that the downstream boom is still slightly sluggish and the quality of the company's operations continues to improve, we adjust the company's revenue and profit forecasts. We forecast that the company's revenue for 2024-2026 will be 2.262/2.394/2.719 billion yuan, respectively (the previous forecast value was 2.308/2.484/2.759 billion yuan), and net profit to mother of 0.23/0.287/0.38 billion yuan, respectively (the previous forecast values were 0.185/0.228/0.309, respectively) billion yuan), corresponding PE is 27/22/16 times, respectively. In the short term, the company was affected by factors such as slowing revenue growth and cost rigidity, and profits temporarily turned into losses during the reporting period, but we believe this did not affect the company's leading position and core competitiveness in the ToB business field. In the first half of the year, the company continued to strengthen internal management control. Operating efficiency and operating quality improved markedly, and achieved good profit performance under pressure on the revenue side. This control capability is expected to continue to drive the company's future development. Therefore, we maintain a “buy” rating.

Risk warning: risk of economic uncertainty; risk of uncertainty in government IT investment budget; risk of increased industry competition, etc.