Incidents:

The company achieved revenue of 1.2 billion yuan in the first three quarters of 2024, a year-on-year decrease of -11.53%; net profit to mother of -8.58 million yuan; and non-net profit deducted from mother of -71.11 million yuan. Among them, 2024Q3 achieved revenue of 0.439 billion yuan, a year-on-year increase of 23.58%; net profit to mother of -1.9 million yuan; and deducted non-net profit from mother of -2.82 million yuan.

2024Q3 revenue increased 23.58% year over year

The company's third-quarter revenue increased 23.58% year over year. In addition, the company's revenue declined year-on-year in the first three quarters, with net profit loss of 71.11 million yuan, mainly due to a decrease in investment income from joint ventures and joint ventures and adjustments based on the latest litigation results, as well as a decrease in credit impairment losses of -220.72% year-on-year due to reduced preparation for impairment of accounts receivable.

Relying on AI technology, the three major business platforms continue to gain strength

The company's self-developed “A Thousand Questions of the Wise Man” model has completed the filing of both the algorithm and model. At the same time, the three major business platforms continue to iterate, providing digital transformation and intelligent upgrading for multiple industries. Among them, 1) Rubik's Cube Mix, an AI marketing SaaS platform, provides AIGC advertising material generation, advertising strategy optimization, and AI live e-commerce conversion functions. The number of 24H1 service enterprise customers exceeds 1,600. 2) Yuanxiang, a spatial intelligence MaaS platform, provides basic large-scale model services for the field of 3D spatial intelligence. The existing AI+3D visualization and AI+3D data set functions cover 33 functional modules. 3) Mobile application distribution PaaS platforms achieve new growth by serving many head generative AI products. 24H1 added 12.52 million users and served more than 6,000 mobile apps.

Data resources and traffic valleys help the development of data elements

In terms of data resources, the company forms multiple private data sets based on text, images, audio and video, and 3D data collected from various business platforms. Currently, it has accumulated about 4 million pieces of marketing video material, over 0.8 million sets of 3D data, and 0.35 million sets of multi-modal data. In terms of digital business scenarios, following the Shanxi Data Traffic Valley, Dalian Data Traffic Valley also officially opened in the first half of '24. At present, the Shanxi Park has attracted about 800 enterprises from 16 digital economy segments, including digital intelligent manufacturing and digital entertainment, to enter the park, and continues to provide rich application scenarios for the company's digital and intelligent business.

Profit Forecasts, Valuations, and Ratings

The company relies on AI technology capabilities and three major business platforms to promote the development of data traffic business, and Data Traffic Valley will continue to provide application scenarios for the company's digital business. Therefore, we expect the company's revenue for 2024-26 to be 1.863/1.975/2.084 billion yuan, corresponding growth rates of 5.74%/6.02%/5.56%, and net profit to mother of 0.013/0.02/0.037 billion yuan, respectively. Maintain the company's “gain” rating.

Risk warning

The risk that technology development in the AI industry falls short of expectations, the risk that the company's AI technology will not advance as expected, and the risk that the company's data traffic business will fall short of expectations.