Key points of investment:
The company published its 24-year semi-annual report. The company 24H1 achieved operating income of 3.81 billion yuan, +13% year over year, and achieved net profit to mother of 0.79 billion yuan, a year-on-year loss of 0.05 billion yuan; after deducting non-net profit of -0.79 billion yuan, a loss of 0.15 billion yuan. The results are in line with expectations and are in line with expectations.
The share of cloud service revenue continues to rise, and subscription contract liabilities have increased significantly. According to the company's announcement, the company's 24H1 cloud service business achieved revenue of 2.85 billion yuan, or +21.3%, accounting for 74.8% of revenue, an increase of 5.2 percentage points over the same period last year; subscription related contract liabilities were 1.95 billion yuan, +33.8% compared to the same period last year, accounting for 69% of total contract debt. Furthermore, the ARR for the company's cloud business was 2.33 billion yuan, +13.1% year-on-year, confirming that the cloud business is progressing smoothly.
Large enterprises are expanding their customers faster, and some are starting to transform subscriptions. According to the company's announcement, the company's 24H1 large enterprise customers achieved revenue of 2.38 billion yuan (YoY +11%), of which cloud revenue was 1.765 billion yuan (YoY +17%). Launch the public cloud SaaS product “BIP Super Edition” for large customers to begin the transformation of large enterprise subscriptions. During the reporting period, 3 new first-tier central enterprises were signed, with a total of 40 contracts, which will provide a steady source of growth in the next few years.
Midsize customers accelerate AI applications and achieve high cloud revenue growth. According to the company's announcement, the company's 24H1 medium-sized enterprise customers achieved revenue of 0.6 billion yuan (YoY +8%), of which cloud revenue was 0.43 billion yuan (YoY +39%). Among them, YonSuite's revenue increased 116% year over year, and the renewal rate increased to 92.4%. It is expected that with the further promotion of AI applications, the customer unit price and payment rate will further increase.
Cost-side improvements are obvious, and cost-side control is expected to be effective in the future. According to the company's announcement, the overall gross profit margin of 24H1 is 52.5%, a significant improvement over 48.9% in the same period last year. It is mainly driven by the three factors of continuous improvement in cost-side human efficiency, product subscription transformation, and mature delivery system. The cost side is being dragged down in the short term by personnel optimization, earlier marketing activities, and increased amortization of intangible assets. There is still room for profit margin improvement, and it is expected to continue to rise within the next 2 years.
The YonBIP product architecture was completed, and AI promoted high-quality development. According to the company's announcement, BIP3 will gradually improve the product ecosystem, covering 10 major fields and 30 industry segments horizontally; achieving vertical product integration, from startup growth to giant enterprises with a set of codes, a set of products, and seamless switching; YongPT 2.0 will release 3 large vertical models, covering 100+ application scenarios, and we expect related revenue to exceed 100 million yuan in 24 years.
Maintain an “Overweight” rating. Maintaining profit forecasts, the company is expected to achieve revenue of 11.39, 13.28, 15.64 billion yuan in 24-26, and net profit of 0.29, 0.51, and 0.81 billion yuan in 24-26. The company's cloud business and AI are progressing smoothly, the long-term localization space is broad, the industry pattern and industrial position are clear, negative effects such as structural adjustments have improved marginally, and initial results in cost control have been achieved. Based on judging the company's future long-term growth, it maintains a “gain” rating.
Risk warning: Increased market competition has put pressure on gross margins; major customer development progress falls short of expectations.