Event: On August 23, 2024, Yunsai Smart Link released the 2024 Interim Report. In 2024 H1, the company achieved revenue of 2.89 billion yuan, up 15.70% year on year; net profit to mother was 0.113 billion yuan, up 21.78% year on year; net profit after deducting non-return to mother was 0.097 billion yuan, up 12.04% year on year. The results are in line with market expectations.

Key points of investment

Q2 grew steadily, and continued emphasis was placed on R&D investment: in Q2 2024, the company achieved revenue of 1.465 billion yuan, up 5.36% year on year; net profit to mother was 0.053 billion yuan, up 3.64% year on year; net profit after deducting non-return to mother was 0.041 billion yuan, a decrease of 26.36% year on year. In 2024 H1, the company invested 0.2 billion yuan in R&D, and the technology investment rate reached 6.91%. A total of 70 intellectual property rights were applied for, including 17 invention patents.

Market expansion is progressing rapidly, and many benchmark customers have been obtained: In the field of transportation, the first phase of the Shanghai Railway Dispatch Operation and Skills Training Base Cloud Platform Supply and Service Project constructed by the company is being built and implemented. In the field of entertainment, the company won the bid for the Yangtze River Delta intelligent project, involving 7 major modules and 26 systems for the green construction and energy saving system project; in the field of municipal livelihood, at the end of 2023, the company won the bid for the Shanghai Urban Investment Water Industry IoT Platform Project. In the field of healthcare, in 2023, the company won the joint bid for the ICU digital twin application platform project for intensive medicine in municipal hospitals and the ICU digital twin digitization project for intensive medicine in 23 municipal hospitals. In the field of information technology business of the government and various agencies, the company won the bid for the National Market Supervision Digital Pilot Zone (Shanghai) project.

Lay out the artificial intelligence industry and accelerate construction of the second phase of computing power: in 2024 H1, Yunsai Zhilian was elected as the “Executive Deputy Team Leader Unit of the China Artificial Intelligence Industry Development Alliance”. The company accelerated the completion of the construction and supporting operation of the Songjiang Big Data Center (Phase II) intelligent computing center, and built a high-quality intelligent computing center to support large-scale intelligent computing power clusters. The main structure of the Songjiang Big Data Center Phase II project has been completely capped. The company completed the construction of the Shanghai Computing Power Service Platform at the Baoshan Node of the Baoshan Big Data Center, and established a high-capacity OTN link between the two major data centers in Songjiang and Baoshan. The company strongly supports the development of the participating company Shanghai Intelligent Computing Power Technology Co., Ltd. to create an independent intelligent computing power industry ecosystem; in terms of vertical model applications, it will focus on vertical fields dominated by government services and large state-owned enterprises.

Profit forecast and investment rating: The company is a leading digital enterprise in Shanghai. Shanghai is actively building an artificial intelligence industry, and the second phase of the company's computing power project is progressing rapidly. At the same time, it is actively cooperating with Microsoft in the field of AI. At the same time, the company actively lays out the data element industry and is a pioneer in the construction of the data element industry in Shanghai.

Based on this, we maintain the company's 2024-2026 net profit forecast of 0.215/0.238/0.263 billion yuan, maintaining a “buy” rating.

Risk warning: Policy progress falls short of expectations; technology research and development falls short of expectations; industry competition intensifies.