Key points of investment

On October 29, 2024, the company's 2024 three-quarter report revealed that in the first three quarters, the company achieved total operating income of 0.619 billion yuan, a year-on-year increase of 2.95%, and realized net profit to mother of 44.4357 million yuan, an increase of 94.35% over the previous year, and the company's profitability recovered significantly. The 2024Q3 company achieved revenue of 0.222 billion yuan in a single quarter, an increase of 41.42% over the previous year, and achieved net profit to mother of -15.3758 million yuan. The loss margin for the single quarter narrowed sharply.

The company's three-quarter report revealed that overall profitability recovered significantly in the first three quarters

In the first three quarters of 2024, the company achieved total revenue of 0.619 billion yuan, an increase of 2.95% year on year; net profit to mother was 44.4357 million yuan, a significant increase of 94.35% year on year. The company's overall gross margin was 62.73%, up 2.65pct year-on-year. In terms of cost ratios, the company's sales, R&D and management expenses for the first three quarters of 2024 were 15.87%/17.73%/25.24%, respectively, down 4.88 pcts, up 1.30 pcts, and 0.78 pcts, respectively. In the first three quarters of 2024, the company's net operating cash flow was -3.8606 million yuan, and the outflow fell sharply by 82.42% over the same period last year.

Q3 In a single quarter, the company achieved significant revenue growth and significant cost control results

Looking at a single quarter, 2024Q3 achieved total revenue of 0.222 billion yuan, a sharp increase of 41.42% year on year; realized net profit to mother of -15.3758 million yuan. The loss margin narrowed by 67.13% year on year, and the overall gross margin was 49.23%, down 2.42 pcts year on year. 2024Q3's sales, R&D and management expenses rates were 15.51%/17.54%/23.32%, respectively, down 9.63/2.46/10.53pct, respectively. The operating efficiency of the single quarter improved significantly year-on-year.

Relying on the core technical advantages of AI+ big data, the company's continued expansion of overseas markets is expected to open up new market space

Based on years of core technology accumulation in the field of AI and big data, the company currently has more than 300 billion pieces of data, and the news information collection network covers 196 countries and regions around the world, supporting more than 130 languages. In terms of products, the company has developed a global information insight SaaS service platform, covering functions such as multi-dimensional cross-language global information search, one-stop information subscription, information statistical analysis, and multilingual translation comparison, which can meet the different needs of overseas users.

Since 2024, the company has accelerated its global layout. In September, the company continued to undertake the second phase of the project by the Hong Kong government department in China, with a contract amount exceeding HK$12 million. In the future, the company and customers will expand open source intelligence service cooperation in more fields and use large-scale models to further empower users with data. In addition, the company has also reached cooperation with a CNPC overseas intelligent security company to provide political and economic intelligence warning services for central enterprises doing business overseas, avoid incident risks, and provide professional intelligence analysis reports as a basis for decision-making.

Profit forecasting and valuation

We expect the company to achieve revenue of 0.937/1.2/1.502 billion yuan in 2024-2026, up 19.84%/28.05%/25.24% year on year, and net profit to mother of 0.204/0.268/0.345 billion yuan respectively, up 460.59%/31.33%/28.36% year on year, corresponding EPS of 0.23/0.31/0.39 yuan respectively. Maintain a “buy” rating.

Risk warning

1. Risks brought about by increased market competition; 2. Risks caused by order growth or failure to meet expectations; 3. Risks brought about by insufficient implementation and commercialization of AIGC-related technologies.