Investment Rating - The report does not provide a specific investment rating for the company [5]. Core Insights - The company, Innovation Qizhi, is a leading provider of enterprise-level AI solutions in China, focusing on digital transformation and efficiency improvements across various industries [1][17]. - The company has developed two proprietary AI platforms: the MMOC platform, which emphasizes analytical AI, and the AInnoGC platform, which focuses on generative AI [2][30]. - In 2023, the company generated total revenue of 1.75 billion RMB, with manufacturing accounting for 67.2% of this revenue [1][3]. - The company has seen rapid revenue growth, with a compound annual growth rate (CAGR) of 83% in manufacturing revenue from 2020 to 2023 [43]. Company Background - Innovation Qizhi was established in 2018 and has become the largest provider of enterprise-level AI solutions in China, covering eight major industries [1][17]. - The company has a strong focus on the manufacturing and financial sectors, providing solutions that help clients reduce costs and improve production quality [1][3]. Products and Business - The MMOC platform includes components for data processing, model training, and application deployment, aimed at enhancing operational efficiency for manufacturing clients [2][22]. - The AInnoGC platform has evolved to include the AInno-75B version, supporting various applications such as data analysis and knowledge Q&A [30][33]. - The company has successfully implemented AI solutions in industries such as steel metallurgy, energy, automotive, and high-tech manufacturing [3][34]. Financial Performance and Valuation - The company reported a net loss of 1.9 billion RMB in 2023, with a stable gross margin of 33.6% [4][43]. - Revenue is projected to decline by 31.7% in 2024, with a corresponding price-to-sales ratio of 2.4 times [4][46]. - The company’s valuation is based on a price-to-sales ratio of 1.7 times for 2023, compared to peers in the AI sector [46].

Financial Performance - Total revenue for the first half of 2024 was RMB 571.7 million, a decrease of 38.1% from RMB 923.9 million in the same period of 2023[9]. - Gross profit for the first half of 2024 was RMB 193.2 million, down 35.4% from RMB 298.9 million in the first half of 2023[9]. - Operating loss for the first half of 2024 was RMB 190.8 million, compared to an operating loss of RMB 211.0 million in the same period of 2023[9]. - Net loss for the first half of 2024 was RMB 184.6 million, a slight improvement from a net loss of RMB 196.1 million in the first half of 2023[9]. - The company reported an adjusted net loss of RMB 37.4 million for the first half of 2024, compared to an adjusted net loss of RMB 39.4 million in the first half of 2023[9]. - The company reported a total comprehensive loss of RMB 184,693 thousand for the period, compared to RMB 196,155 thousand in the previous year[74]. - The net loss attributable to owners of the company was RMB 195,483,000 for the six months ended June 30, 2024, compared to a loss of RMB 195,688,000 in the same period of 2023[117]. - The company reported a net loss of RMB 195,688 thousand for the six months ended June 30, 2024, compared to a net loss of RMB 111,788 thousand for the same period in 2023, indicating a deterioration in performance[82]. Revenue Breakdown - Revenue from product and solution sales accounted for 94.4% of total revenue in the first half of 2024, totaling RMB 539.7 million[10]. - Revenue from data solution services was RMB 32.0 million, representing 5.6% of total revenue in the first half of 2024[10]. - Revenue from end-users increased to RMB 351.5 million, making up 61.5% of total revenue, compared to 40.8% in the first half of 2023[11]. - Revenue from system integrators decreased significantly to RMB 220.2 million, down from RMB 546.8 million in the same period of 2023[11]. - In the manufacturing sector, revenue for the six months ended June 30, 2024, was RMB 437.5 million, down 28.3% from RMB 610.5 million in the prior year[35]. - In the financial services sector, revenue for the six months ended June 30, 2024, was RMB 82.9 million, a decline of 64.2% from RMB 231.6 million in the same period last year[35]. Cost Management - The company aims to focus on high-quality revenue and optimizing its business structure to ensure long-term sustainable growth[34]. - The company is focusing on strategic cost management and operational efficiency to improve financial performance moving forward[74]. - General and administrative expenses for the six months ended June 30, 2024, were RMB 96.4 million, down 49.3% from RMB 190.0 million in the same period last year[39]. - Research and development expenses for the six months ended June 30, 2024, were RMB 148.0 million, down 33.7% from RMB 223.1 million in the same period of 2023[40]. - Selling and distribution expenses for the six months ended June 30, 2024, were RMB 79.3 million, a decrease of 13.0% from RMB 91.2 million in the prior year[38]. Cash Flow and Liquidity - Cash and cash equivalents amounted to approximately RMB 1,332.9 million as of June 30, 2024[14]. - The company improved cash flow from operating activities by 76.8%, reducing it to RMB 25.9 million[14]. - The total cash and cash equivalents at the end of the reporting period were RMB 1,332,903 thousand, down from RMB 1,669,467 thousand at the beginning of the period, representing a decrease of approximately 20.1%[82]. - The company maintained a net cash position as of June 30, 2024, making the debt-to-equity ratio not applicable[47]. - The company reported a cash inflow from financing activities of RMB 19,578 thousand for the first half of 2024, a significant decrease from RMB 265,104 thousand in the same period of 2023[82]. Strategic Initiatives - The company plans to focus on expanding its product offerings and enhancing its data solutions to drive future growth[9]. - The company aims to enhance AI technology applications and expand into asset management sectors, including securities and leasing, to meet growing market demands[33]. - The company plans to deepen the integration of large model technology with MOM industrial software systems, enhancing the professionalism and maturity of industrial software products[30]. - The company is expanding its AI and data product development investments to enhance its industry coverage and improve client effectiveness in key business scenarios[25]. - The company has established smart logistics scenarios in steel enterprises, successfully tracking molten iron and steel in challenging environments using image processing and visual recognition technologies[24]. Shareholder Information - The company successfully placed 19,900,000 new H shares at a price of HKD 19.70 per share, representing a discount of approximately 16.17% from the market price of HKD 23.50 on June 6, 2023[57]. - The company has adopted a 2024 H share equity incentive plan with a maximum limit of H shares to be purchased not exceeding RMB 300 million[56]. - The largest shareholder group includes Mr. Wang, Ms. Tao, Ms. Lang, and Mr. Zhang, collectively holding 145,800,000 shares, accounting for 25.80% of the issued shares[68]. - Innovation Works holds 135,000,000 shares, representing approximately 23.89% of the issued shares[68]. - Mr. Xu holds 54,828,875 shares, representing approximately 9.70% of the issued shares[65]. Employee and Management - As of June 30, 2024, the group had a total of 964 employees, with employee welfare expenses amounting to approximately RMB 207.2 million, down from RMB 288.1 million for the same period in 2023[54]. - The company has implemented employee training programs to enhance skills and integrate new employees into the corporate culture[55]. - The company has established an employee incentive plan to retain talent and promote long-term sustainable development[56]. - The total remuneration for key management personnel was RMB 17,701,000 in 2024, down 56.2% from RMB 40,297,000 in 2023[149]. Financial Risks and Accounting - The group faces various financial risks, including foreign exchange risk, cash flow and fair value interest rate risk, credit risk, and liquidity risk[89]. - The liquidity risk analysis shows total financial liabilities of RMB 790,984 thousand as of June 30, 2024, compared to RMB 668,110 thousand as of December 31, 2023[95][96]. - The group anticipates no major changes in its risk management policies since December 31, 2023[89]. - The group has assessed the impact of new or revised accounting standards, expecting no significant effect on financial performance upon their implementation on January 1, 2024[86].

Group 1 - The company held a mid-term performance conference for 2024, hosted by General Manager Feng Yu, with participation from CEO Xu Gui, CTO Zhang Baan, and CFO Yu Jin [1] Q&A Session Summary Question: What are the key highlights of the company's mid-term performance? - The management team provided insights into the financial performance and strategic direction, emphasizing the importance of adapting to market changes and enhancing operational efficiency [1]

Financial Performance - Revenue for the six months ended June 30, 2024, was RMB 571.7 million, a decrease of 38.1% compared to RMB 923.9 million in the same period of 2023[2]. - Gross profit for the same period was RMB 193.2 million, with a gross margin of 33.8%, an increase of 1.4 percentage points year-on-year[7]. - Adjusted net loss narrowed to RMB 37.4 million, a decrease of 5.1% from RMB 39.4 million in the previous year[7]. - The company's cash and cash equivalents amounted to approximately RMB 1,332.9 million as of June 30, 2024[7]. - The company's cost of sales for the six months ended June 30, 2024, was RMB 378.5 million, a reduction of 39.4% from RMB 625.0 million in 2023[32]. - The overall gross profit for the same period was RMB 193.2 million, down 35.4% from RMB 298.9 million in 2023[34]. - The overall gross margin improved to 33.8%, an increase of 1.4% from 32.4% in 2023, due to higher delivery efficiency and cost optimization[34]. - Operating loss for the six months ended June 30, 2024, was RMB 190.8 million, a decrease of 9.6% compared to an operating loss of RMB 211.0 million for the same period in 2023[40]. - Net loss for the six months ended June 30, 2024, was RMB 184.6 million, a decline of 5.9% from a net loss of RMB 196.1 million for the same period in 2023[43]. - Financial income for the six months ended June 30, 2024, was RMB 7.7 million, down from RMB 16.0 million for the same period in 2023, mainly due to decreased interest income from bank deposits[41]. - Financial costs decreased from RMB 4.6 million for the six months ended June 30, 2023, to RMB 3.8 million for the same period in 2024, primarily due to reduced interest expenses on convertible bonds[42]. - Other income for the six months ended June 30, 2024, was RMB 23.3 million, primarily related to government subsidies associated with financial assistance from local governments in China[38]. - The adjusted net loss for the six months ended June 30, 2024, was RMB 37.4 million, compared to an adjusted net loss of RMB 39.4 million for the same period in 2023[45]. - The company reported a significant decrease in financial asset impairment losses, from RMB 35,968,000 in the previous year to RMB 4,538,000[61]. - The company incurred a net loss of RMB 184,553,000 for the six months ended June 30, 2024, compared to a net loss of RMB 196,053,000 in the prior year[62]. - The net loss attributable to owners of the company for the six months ended June 30, 2024, was RMB (195,483) thousand, slightly improved from RMB (195,688) thousand in 2023[82]. - Basic loss per share remained at RMB (0.36) for both the six months ended June 30, 2024, and 2023[82]. - The company did not recommend an interim dividend for the six months ended June 30, 2024, consistent with 2023[81]. Revenue Breakdown - The sales of products and solutions accounted for 94.4% of total revenue, while data solution services contributed 5.6%[3]. - Revenue from end-users was RMB 351.5 million, representing 61.5% of total revenue, while system integrators contributed RMB 220.2 million, or 38.5%[4]. - The manufacturing sector generated RMB 437.5 million, accounting for 76.5% of total revenue, while the automotive equipment sector contributed RMB 88.6 million, or 15.5%[5]. - Revenue from the financial services sector decreased by 64.2%, amounting to RMB 82.9 million compared to RMB 231.6 million in 2023[31]. - Revenue from Customer B for the six months ended June 30, 2024, was RMB 60,424 thousand, while Customer A contributed RMB 113,381 thousand in the previous period[74]. Research and Development - The company has filed a total of 1,326 patents, including 1,079 invention patents, as of June 30, 2024[7]. - Research and development expenses for the six months ended June 30, 2024, were RMB 148.0 million, down 33.7% from RMB 223.1 million for the same period in 2023, mainly due to improved R&D efficiency and effective management of R&D expenditures[37]. - The company plans to enhance its research and commercialization capabilities, with approximately RMB 392.05 million and RMB 217.81 million allocated for these purposes, respectively[59]. Innovation and Technology - The AInno-75B model achieved the highest rating (4+) in the China Academy of Information and Communications Technology's evaluation of industrial AI models[7]. - The company launched the upgraded version of its industrial large model technology platform, AInno-75B, and several generative AI applications during the reporting period[6]. - Innovation Qizhi ranked first in the "2024 Forbes China AI Technology Companies TOP 50" and "2024 Forbes China AI Innovation Technology TOP 10" lists[8]. - The company launched the AInnoGC 2.0 industrial model in March 2023, enhancing capabilities in generative AI applications and establishing a data closed-loop with industrial clients[10]. - The AInno-75B multimodal industrial model was successfully released in the first half of 2024, achieving a 50% reduction in deployment costs without significant performance loss[13]. - The ChatX series applications, including ChatDoc and ChatBI, have improved data analysis efficiency and user experience, with enhanced capabilities for various data types[12]. - The company is expanding its AI+MOM product strategy, integrating AI technology into existing MOM core products across various industries[15]. - The MMOC AI platform continues to mature, supporting industrial intelligence applications and driving high-quality business growth[14]. - The company has been recognized as a leading AI industrial quality inspection solution provider in China by IDC[8]. - The ChatRobot Pro has been upgraded to enhance task generalization and user interaction in industrial settings[12]. - Innovation Qizhi has established a research center for AI industrial models in Shandong Province, recognized by the provincial development and reform commission[8]. - The company continues to promote integrated hardware and software solutions in the machine vision sector, significantly accelerating product promotion processes in niche markets[16]. - In the automotive equipment sector, the company has developed an advanced conveyor demonstration line, enhancing operational efficiency and reducing reliance on professional data analysts through real-time data insights[17]. - The company has successfully implemented multiple first-of-its-kind applications in the industrial logistics sector, including the first AI+5G electric locomotive hardware transformation, which is nearing completion[18]. - The company is enhancing its industrial sustainability efforts by leveraging AI dual platforms to drive rapid iteration and upgrade of intelligent products and services[19]. - The company has achieved significant results in the digital software sector by applying AI technology and data solutions, improving data governance efficiency and accuracy through tailored solutions[20]. - The introduction of intelligent data governance solutions has effectively addressed challenges related to rapid business development and frequent data table construction[20]. - The company has developed personalized SQL query and intelligent question-asking functions, significantly lowering technical barriers for non-technical users[20]. - The company aims to enhance the effectiveness of financial industry clients in key business scenarios through integrated product features and customized industry suites[20]. - The company is committed to increasing investment in AI solutions and data product development to expand its industry coverage[20]. - The implementation of intelligent quality inspection solutions in the glass panel semiconductor industry has led to more efficient production process feedback through large model technology[16]. - The ChatX series of generative AI applications will continue to enhance product maturity and expand solution sales, focusing on core capabilities like RAG, Text-To-SQL, and Text-To-Chart[22]. - The company is committed to optimizing the AInno-15B/75B industrial large model to meet practical business application needs while ensuring low computational costs[24]. - The integration of large model technology with MOM industrial software will be deepened, particularly in sectors like food and beverage, new materials, and equipment manufacturing[26]. - The company plans to leverage existing customer resources and industry understanding to accelerate the application of large model technology for business value[25]. - The development of industrial intelligent robots will focus on optimizing end-to-end pre-trained VLA large models to enhance generalization capabilities[22]. - The company aims to provide more specialized and targeted intelligent solutions by utilizing the increasingly mature large model intelligent platform[26]. - The company will continue to invest in the optimization of industrial large models and supporting service engines to drive innovation in the ChatX series applications[24]. - The strategy of "1+N/1XN" will be implemented to achieve the embedding of mature large model products in lighthouse customers and replicate this success in other industry clients[26]. - The company will explore more applications of large model technology in intelligent equipment, maintaining an open attitude towards product technology exploration[26]. Cost Management - Selling and distribution expenses were RMB 79.3 million, a decrease of 13.0% from RMB 91.2 million in 2023, attributed to reduced share-based payment expenses[35]. - General and administrative expenses for the six months ended June 30, 2024, were RMB 96.4 million, a decrease of 49.3% compared to RMB 190.0 million for the same period in 2023, primarily due to reduced share-based payment expenses and effective cost control[36]. - Employee benefits expenses decreased to RMB 207,192 thousand, a reduction of 28.0% compared to RMB 288,084 thousand in the previous year[76]. Assets and Liabilities - As of June 30, 2024, total assets amounted to RMB 3,066,955 thousand, a decrease of 6.7% from RMB 3,289,157 thousand as of December 31, 2023[63]. - Non-current assets totaled RMB 752,807 thousand, down 5.4% from RMB 795,900 thousand in the previous period[63]. - Current assets decreased to RMB 2,314,148 thousand, a decline of 7.2% from RMB 2,493,257 thousand[63]. - The company's total equity was RMB 2,089,647 thousand, down 6.0% from RMB 2,224,145 thousand[65]. - Cumulative losses increased to RMB 2,043,735 thousand, compared to RMB 1,848,252 thousand in the previous period, reflecting a rise of 10.6%[65]. - The total liabilities decreased to RMB 977,308 thousand, down 8.2% from RMB 1,065,012 thousand[66]. - The company reported a non-current liability total of RMB 201,380 thousand, which is a slight increase from RMB 199,545 thousand[66]. - Trade receivables decreased from RMB 789,512,000 as of December 31, 2023, to RMB 558,808,000 as of June 30, 2024, representing a decline of approximately 29.2%[88]. - The net amount of other receivables increased from RMB 18,607,000 as of December 31, 2023, to RMB 31,233,000 as of June 30, 2024, reflecting a growth of approximately 67.6%[90]. - The total borrowings increased from RMB 76,651,000 as of December 31, 2023, to RMB 101,557,000 as of June 30, 2024, indicating an increase of approximately 32.4%[93]. - The fair value of contingent consideration increased from RMB 174,355,000 as of December 31, 2023, to RMB 185,559,000 as of June 30, 2024, showing an increase of approximately 6.9%[97]. - The total amount of trade payables decreased from RMB 353,707,000 as of December 31, 2023, to RMB 277,930,000 as of June 30, 2024, representing a decline of approximately 21.4%[95]. - The total amount of prepayments to suppliers increased from RMB 48,460,000 as of December 31, 2023, to RMB 107,701,000 as of June 30, 2024, reflecting a growth of approximately 122.2%[90]. - The fair value of financial assets at fair value through profit or loss decreased from RMB 103,826,000 as of December 31, 2023, to RMB 51,995,000 as of June 30, 2024, indicating a decline of approximately 50.0%[92]. Corporate Governance - The company was established as a limited company in February 2018 and transitioned to a joint-stock company in May 2021, with H-shares listed on the Hong Kong Stock Exchange on January 27, 2022[99]. - The board of directors includes executive and non-executive members, ensuring a diverse governance structure[100]. - The company operates under the regulations of the Hong Kong Stock Exchange, adhering to the latest listing rules[100].

Revenue Growth and Financial Performance - Revenue increased to RMB 1,751,045 thousand in 2023, up from RMB 1,557,643 thousand in 2022, representing a growth of 12.4%[9] - Gross profit rose to RMB 588,485 thousand in 2023, compared to RMB 507,078 thousand in 2022, an increase of 16.0%[9] - Revenue reached RMB 1,751.0 million, a year-on-year increase of 12.4%, with gross profit of RMB 588.5 million, up 16.1% year-on-year, and a gross margin of 33.6%, an increase of 1 percentage point[15] - Revenue increased by 12.4% from RMB 1,557.6 million in FY2022 to RMB 1,751.0 million in FY2023, driven by growth in manufacturing and financial services sectors, as well as an increase in total and premium customer numbers[42] - Gross profit increased by 16.1% from RMB 507.1 million in FY2022 to RMB 588.5 million in FY2023, with gross margin improving from 32.6% to 33.6%[44] - Revenue from sales of integrated products and solutions reached RMB 1,632,358,000[197] - Revenue from data solution services amounted to RMB 118,687,000[197] Manufacturing Sector Performance - Revenue from the manufacturing sector in the specialized and innovative fields increased significantly to 67.2% of total revenue[3] - The company added 105 new customers, with a significant increase in contributions from manufacturing clients[3] - The "AI+Manufacturing" business segment revenue reached RMB 1,176.4 million, a year-on-year increase of 24.1%, accounting for 67.2% of total revenue, up 6.3 percentage points[15] - The company's manufacturing sector revenue increased to RMB 1,176.4 million, accounting for 67.2% of total revenue, up from 60.9% in 2022[14] - Manufacturing sector revenue grew by 24.1% from RMB 948.2 million in FY2022 to RMB 1,176.4 million in FY2023, accounting for 67.2% of total revenue[42] AI and Technology Development - The company is focusing on the integration of "automation + informatization + intelligence" to empower new industrialization[3] - The company is committed to advancing AI applications in advanced manufacturing to support the rise of new industrialization[4] - The company's strategy is centered on "AI + manufacturing" with a focus on specialized and innovative sectors[3] - The company has significantly increased its investment in the development of the "AInnoGC Industrial Large Model" technology platform, enhancing capabilities in underlying algorithms, model closed-loop, platform engineering, and scenario implementation, and has developed AInnoGC 2.0[21] - The company developed industrial large models AInno-15B in H1 2023 and AInno-75B in H2 2023, recognized by domestic and international evaluation agencies[24] - The company strengthened AIGC technology in 2023, focusing on industrial knowledge generation, data analysis, and task orchestration, improving product intelligence[26] - The company is leveraging its MMOC AI technology platform and AInnoGC industrial large model to empower more industrial manufacturing application scenarios in the AI 2.0 era[33] - The company is actively developing cross-modal AI technologies, inspired by advancements like OpenAI's Sora, to enhance human-machine interaction and expand AI applications across industries[19] Customer and Market Expansion - The number of premium customers grew to 81 in 2023, up from 71 in 2022, with premium customer revenue reaching RMB 1,427,718 thousand[11] - Total number of customers increased to 397 in 2023 from 292 in 2022[11] - The number of customers increased from 292 in 2022 to 397 in 2023, a year-on-year increase of 36.0%[15] - Total number of customers increased from 292 in FY2022 to 397 in FY2023, with premium customers (contributing RMB 4.5 million or more annually) rising from 71 to 81[42] - The company aims to support Chinese manufacturing enterprises in expanding overseas markets through "1+N" expansion and "1xN" replication strategies based on existing technology platforms and solutions[33] Financial Health and Losses - Adjusted net loss rate further narrowed, indicating improved financial health[3] - Operating loss widened to RMB 600,012 thousand in 2023 from RMB 392,291 thousand in 2022[9] - Net loss for the year increased to RMB 570,272 thousand in 2023 from RMB 361,160 thousand in 2022[9] - Adjusted net loss ratio continued to narrow compared to the previous fiscal year, and net cash used in operating activities improved significantly by 40.7% year-on-year[15] - Operating loss increased by 52.9% from RMB 392.3 million in FY2022 to RMB 600.0 million in FY2023, primarily due to increased share-based payment expenses[50] - Net loss for the year increased by 57.9% from RMB 361.2 million in FY2022 to RMB 570.3 million in FY2023, mainly due to increased share-based payment expenses[51] Sector-Specific Revenue Changes - The company's automotive equipment sector revenue grew to RMB 393.1 million, accounting for 22.5% of total revenue, up from 18.3% in 2022[14] - The company's 3C high-tech sector revenue increased to RMB 135.3 million, accounting for 7.8% of total revenue, up from 6.8% in 2022[14] - The company's OLED panel and semiconductor manufacturing sector revenue decreased to RMB 122.9 million, accounting for 7.0% of total revenue, down from 8.6% in 2022[14] - The company's steel and metallurgy sector revenue decreased to RMB 65.3 million, accounting for 3.7% of total revenue, down from 8.3% in 2022[14] - The company's energy and power sector revenue decreased to RMB 70.4 million, accounting for 4.0% of total revenue, down from 6.4% in 2022[14] R&D and Innovation - The company has significantly increased its investment in the development of the "AInnoGC Industrial Large Model" technology platform, enhancing capabilities in underlying algorithms, model closed-loop, platform engineering, and scenario implementation, and has developed AInnoGC 2.0[21] - The ManuVision machine vision platform has improved usability, operator richness, and deliverability, supporting multiple customer project deliveries, particularly in glass panel defect detection applications[21] - The MatrixVision edge video intelligence platform has enhanced stability and expanded support for computing power types, focusing on industrial safety production applications[21] - The Orion distributed machine learning platform has achieved 100% full-process online integration with ManuVision and MatrixVision, supporting large-scale customer business expansion in visual solutions[21] - The Cloud platform introduced MAAS (Model As A Service), improving model service efficiency and supporting rapid R&D and deployment of new directions like AInnoGC[21] - The company developed industrial large models AInno-15B in H1 2023 and AInno-75B in H2 2023, recognized by domestic and international evaluation agencies[24] - The company strengthened AIGC technology in 2023, focusing on industrial knowledge generation, data analysis, and task orchestration, improving product intelligence[26] - R&D expenses increased by 8.0% from RMB 416.3 million in FY2022 to RMB 449.8 million in FY2023, driven by business expansion[47] - R&D expenses as a percentage of revenue decreased from 26.7% in FY2022 to 25.7% in FY2023, and excluding share-based payments and amortization of intangible assets from acquisitions, the percentage decreased from 25.3% to 24.3%[47] Operational Efficiency and Cash Flow - The company's operating cash flow showed significant improvement compared to the previous fiscal year[3] - Adjusted net loss ratio continued to narrow compared to the previous fiscal year, and net cash used in operating activities improved significantly by 40.7% year-on-year[15] - The company's operating cash flow showed significant improvement compared to the previous fiscal year[3] - Adjusted net loss ratio continued to narrow compared to the previous fiscal year, and net cash used in operating activities improved significantly by 40.7% year-on-year[15] Strategic Focus and Business Optimization - The company is transitioning from high-speed growth to high-quality growth, emphasizing sustainable and high-quality revenue[3] - The company's business structure has been continuously optimized, with a focus on market rules and strategic adjustments[3] - The company's core business direction aligns with the trend of intelligent upgrading and digital transformation in Chinese manufacturing[3] - The company plans to focus on five major business themes: industrial software, digital intelligence software, industrial logistics, intelligent equipment, and industrial sustainability, to deepen the integration of AI and industrial manufacturing[33] - The company is advancing its AI+MOM industrial software product strategy, focusing on intelligent, platform-based, and vertical core MOM product portfolios in industries like food & beverage, advanced materials, and automotive equipment[38] - The company is embedding large model capabilities into industrial software, such as creating intelligent operation and maintenance knowledge bases for equipment management software, and replicating this capability across enterprise systems[38] - The company is collaborating with industry-leading customers to implement mature large model-embedded products and replicate these solutions across other industries[38] Customer and Revenue Segmentation - Revenue from product and solution sales accounted for 93.2% of total revenue in 2023, down from 97.7% in 2022[12] - Revenue from data solution services increased to RMB 118,687 thousand in 2023, up from RMB 35,414 thousand in 2022, representing 6.8% of total revenue[12] - Revenue from end-users grew to RMB 789,053 thousand in 2023, up from RMB 625,914 thousand in 2022, accounting for 45.1% of total revenue[13] - Revenue from sales of integrated products and solutions reached RMB 1,632,358,000[197] - Revenue from data solution services amounted to RMB 118,687,000[197] Financial Metrics and Expenses - Sales costs rose by 10.7% from RMB 1,050.5 million in FY2022 to RMB 1,162.6 million in FY2023, primarily due to revenue growth[43] - Manufacturing sector sales costs increased by 21.2% from RMB 594.8 million in FY2022 to RMB 720.7 million in FY2023, driven by higher customer numbers[43] - Financial services sector sales costs grew by 6.0% from RMB 281.2 million in FY2022 to RMB 298.1 million in FY2023, due to business expansion[43] - Sales and distribution expenses increased by 31.8% from RMB 162.7 million in FY2022 to RMB 214.5 million in FY2023, primarily due to enhanced commercialization capabilities, expanded customer acquisition channels, and increased marketing efforts[45] - Sales and distribution expenses as a percentage of revenue rose from 10.4% in FY2022 to 12.3% in FY2023, but excluding share-based payments and amortization of intangible assets from acquisitions, the percentage decreased from 7.1% to 6.7%[45] - General and administrative expenses increased by 23.4% from RMB 329.5 million in FY2022 to RMB 406.6 million in FY2023, mainly due to increased share-based payment expenses[46] - General and administrative expenses as a percentage of revenue rose from 21.2% in FY2022 to 23.2% in FY2023, but excluding share-based payments and listing expenses, the percentage decreased from 12.2% to 11.5%[46] - Net impairment losses on financial assets increased from RMB 37.0 million in FY2022 to RMB 86.8 million in FY2023, due to a prudent impairment provision policy for trade and other receivables[48] - Other income increased from RMB 56.0 million in FY2022 to RMB 57.4 million in FY2023, mainly due to increased government grants[48] Acquisitions and Investments - The company acquired a 51% stake in Shanghai Compass Information Technology Co., Ltd. for a total consideration of RMB 229.5 million[56] - The company acquired a 51% stake in Haoya Qizhi (Shanghai) Intelligent Technology Co., Ltd. for a total consideration of RMB 153.0 million[56] - The company acquired a 51% stake in Qingdao Aolipu Qizhi Intelligent Industrial Technology Co., Ltd. for a total consideration of RMB 122.4 million[56] - Target Company 1's revenue for 2022 was RMB 218.18 million, with a committed revenue target of RMB 330 million for 2023 and RMB 440 million for 2024[58] - Target Company 1's non-GAAP net profit for 2022 was RMB 6.6 million, with a committed target of RMB 13.2 million for 2023 and RMB 17.6 million for 2024[58] - Target Company 2's revenue for 2022 was RMB 80 million, with a committed revenue target of RMB 150 million for 2023 and RMB 225 million for 2024[62] - Target Company 2's non-GAAP net profit for 2022 was RMB 6 million, with a committed target of RMB 11 million for 2023 and RMB 23 million for 2024[62] - The company will adjust the share transfer payment based on the performance completion rate of Target Company 1 and Target Company 2 during the performance commitment period[59][64] Risk Management and ESG - The company faces risks in the rapidly evolving AI industry, particularly in AIGC, and must continuously optimize technology and provide innovative solutions to meet customer expectations[70] - The company is heavily investing in R&D, which may negatively impact profitability and operating cash flow, with no guarantee of achieving expected results[70] - The company is expanding into new industry verticals, and failure to succeed in these expansions could significantly impact its business, prospects, and growth momentum[70] - The company is subject to complex and evolving privacy and data protection laws, and non-compliance could harm its reputation and lead to significant legal, financial, and operational consequences[70] - The company is committed to environmental, social, and governance (ESG) principles, focusing on innovation-driven services and customized products to empower digital transformation and energy efficiency[71] - The company has established a comprehensive ESG governance structure, with the board of directors as the highest responsible body for ESG management, and conducts regular external training for ESG-related personnel[72] - The company has developed a comprehensive information security management system, focusing on system reliability, data security, legal compliance, and event traceability[73] - The company has established the "Innovation Qizhi Industrial Robot Innovation Center and High-Skill Talent Training Base" to cultivate and supply high-quality technical talent for the industry[74] Shareholder and Corporate Governance - The company's total share capital as of December 31, 2023, was RMB 565,050,738, divided into 565,050,738 shares with a par value of RMB 1.00 per share[114] - Xu Hui, the company's top executive, holds a beneficial interest of 54,828,875 shares, representing approximately 9.70% of the issued shares[115] - Wang Hua holds a beneficial interest of 8,640,000 shares, representing approximately 1.53% of the issued shares, and jointly holds 145,800,000 shares, representing approximately 25.80% of the issued shares[115] - Innovation Works holds a beneficial interest of 135,000,000 shares, representing approximately 23.89% of the issued shares, and jointly holds 19,440,000 shares, representing approximately 3.44% of the issued shares[118] - Nuoyi Yucheng holds a beneficial interest of 8,640,000 shares, representing approximately 1.53% of the issued shares, and jointly holds 145,800,000 shares, representing approximately 25.80% of the issued shares[118] - Tao Ning holds a beneficial interest of 2,160,000 shares, representing approximately 0.38% of the issued shares, and jointly holds 152,280,000 shares, representing approximately 26.95% of the issued shares[118] - Lang Chunhui jointly holds 154,440,000 shares, representing approximately 27.33% of the issued shares[118] - Zhang Ying jointly holds 154,440,000 shares, representing approximately 27.33% of the issued shares[118] - Beijing Financial Street Xicheng Equity Investment Fund holds a controlled entity interest of 49,787,662 shares, representing approximately 8.81% of the issued shares[118] - Zhongjin Xicheng (Beijing) Investment Co., Ltd., as the investment manager, holds 49,787,662 shares, representing approximately 8.81% of the issued shares[118] - Xu Hui holds 54,828,875 shares, representing 9.70% of the total issued shares[119] - Qingdao Xinnuo Zhicheng Technology holds 33,325,780 shares, representing 5.89% of the total issued shares[119] - SB Global Advisers Capital Markets Limited holds 39,326,630 shares, representing 6.96% of the total issued shares[119] - China International Capital Corporation Limited holds 77,459,084 shares, representing 13.70% of the total issued shares[119] - Innovation Works, Nuosai Yucheng, Wang Hua, and Tao Ning collectively form the largest shareholder group, holding 135,000,000, 8,640,000, 8,640,000, and 2,160,000 shares respectively[120] - Hongxi Investment, Hongyue Investment, and Honger Investment hold 23,133,126, 17,061,024, and 9,593,512 shares respectively, with CICC Alpha and CICC Capital Management holding significant interests[120] - Qingdao Innovation Zhicheng Technology Center holds 5,357,227 shares, with Xu Hui having beneficial ownership[121] - Xinnuo Zhiqi holds 33,814,634 shares, with Xinnuo Zhihe and He Tao having beneficial ownership[121] - The company adheres

Investment Rating - The report maintains an "OUTPERFORM" rating for the company with a target price of HK$21.18, representing a potential upside of 29.4% from the current price of HK$7.34 [3][5]. Core Insights - The company has proactively reduced revenue growth, leading to a slowdown in revenue but a significant increase in the number of customers, with total customers growing by 36% to 397 in 2023 [4][9]. - The company plans to significantly reduce losses in 2024, targeting a 50% reduction in adjusted net loss [4][9]. - The release of the new 75 billion parameter big model, ChatX, is expected to enhance the company's application prospects in various industrial sectors [4][9]. Financial Performance - In 2023, the company reported revenue of RMB 1.751 billion, a year-on-year increase of 12.4%, with the manufacturing sector contributing RMB 1.176 billion, up 24.1% [4][9]. - The adjusted net loss for 2023 was RMB 1.54 billion, with a gross margin of 33.6%, indicating a slight improvement from the previous year [4][9]. - Revenue projections for 2024, 2025, and 2026 are RMB 2.010 billion, RMB 2.369 billion, and RMB 2.863 billion, respectively, with a compound annual growth rate (CAGR) of 15% from 2022 to 2025 [5][9]. Market Position and Valuation - The report assigns a price-to-sales (PS) ratio of 5.5x for 2024, down from the previous 8x, reflecting cautious revenue growth expectations [5][9]. - The target market value is estimated at RMB 11.057 billion, with a corresponding target price of RMB 19.57 per share [5][9]. - The company is positioned in a strong demand sector, with a focus on AI applications in manufacturing, which is expected to drive future growth [4][9].

Core Viewpoint - The company reported a revenue of 1.751 billion RMB for the fiscal year ending December 31, 2023, reflecting a year-on-year increase of 12.42% [1] Financial Performance - Revenue increased primarily due to the expansion of the company's overall scale and sustained healthy development, particularly in the manufacturing and financial services sectors [1] - Gross profit reached 588 million RMB, up 16.05% year-on-year, while R&D expenses amounted to 450 million RMB, an increase of 8.04% [1] Strategic Focus - The company implemented a "focus" strategy, concentrating on its core manufacturing business, with the "AI + manufacturing" segment generating 1.176 billion RMB, a 24.1% increase, accounting for 67.2% of total revenue, up 6.3 percentage points year-on-year [1] - The number of clients increased from 292 in 2022 to 397 in 2023, representing a 36.0% growth [1] Operational Efficiency - The adjusted net loss rate improved compared to the previous fiscal year, and the net cash used in operating activities showed a significant improvement of 40.7% year-on-year, ensuring the company's sustainable operational capability [1] - The company received the "Shandong Provincial High-Quality Development Award" from the Shandong Provincial Department of Industry and Information Technology in 2023, indicating a successful transition towards high-quality development [1]

Financial Performance - The company's revenue for the fiscal year ended December 31, 2023, reached RMB 1,751.0 million, representing a year-on-year growth of 12.4%[7] - Gross profit for the same period was RMB 588.5 million, with a year-on-year increase of 16.1%, resulting in a gross margin of 33.6%, up by 1 percentage point from the previous year[7] - Adjusted net loss for the fiscal year was RMB 154.2 million, showing a continuous narrowing compared to the previous fiscal year[2] - The company reported a net loss of RMB 570,272 thousand for the fiscal year 2023, compared to a net loss of RMB 361,160 thousand in 2022, reflecting a significant increase in losses[70] - Revenue increased by 12.4% from RMB 1,557.6 million in the fiscal year ended December 31, 2022, to RMB 1,751.0 million in the fiscal year ended December 31, 2023[34] - Overall gross profit rose by 16.1% from RMB 507.1 million to RMB 588.5 million, with gross margin improving from 32.6% to 33.6%[37] - The basic and diluted loss per share for the year was RMB 1.05, compared to RMB 0.66 in 2022, reflecting worsening profitability[70] Customer Growth - The number of premium customers increased from 292 in 2022 to 397 in 2023, reflecting a growth of 36.0%[3] - The company reported a total of 81 premium customers in 2023, with premium customer revenue reaching RMB 1,427.7 million[3] - Total customer count grew from 292 to 397, while the number of premium customers increased from 71 to 81[34] Business Segments - The "AI + Manufacturing" business segment generated revenue of RMB 1,176.4 million, a significant increase of 24.1%, accounting for 67.2% of total revenue, up 6.3 percentage points year-on-year[7] - Revenue from data solution services rose significantly from RMB 35.4 million in 2022 to RMB 118.7 million in 2023, representing 6.8% of total revenue[4] - Manufacturing industry revenue rose by 24.1% from RMB 948.2 million to RMB 1,176.4 million, accounting for 67.2% of total revenue[34] - Financial services revenue increased by 5.1% from RMB 382.3 million to RMB 401.8 million, representing 22.9% of total revenue[34] Research and Development - Research and development expenses rose by 8.0% from RMB 416.3 million for the fiscal year ended December 31, 2022, to RMB 449.8 million for the fiscal year ended December 31, 2023[40] - The company has established a merger fund to promote the deep integration of AI and manufacturing, leveraging regional industrial advantages and capital resources[8] - The company is enhancing its product development in data governance, data asset management, and application development platforms for the financial industry, focusing on improving data quality and management efficiency[22] Technology and Innovation - The company achieved a ranking of 3rd in the Chinese computer vision market and maintained 4th in the machine learning platform market according to IDC's report[8] - The company is actively developing the "Qizhi Kongming AInnoGC Industrial Large Model," which received excellent-level verification in compliance with national standards alongside major AI companies like Huawei and Tencent[9] - The company has enhanced its AI technology capabilities by focusing on both analytical AI and generative AI, aiming to drive business development through technological innovation[10] - The company launched multiple generative applications based on large models, enhancing solution upgrades and accelerating business implementation[13] Operational Efficiency - Cash used in operating activities improved significantly, with a year-on-year increase of 40.7%, indicating enhanced operational sustainability[7] - The company has developed an intelligent automation solution using industrial robots, big data, and AI, which optimizes production processes and enhances real-time monitoring and data analysis capabilities[20] - The integration of AI technology into industry products and solutions aims to promote innovation and transformation across key sectors such as steel, semiconductor, and automotive equipment[18] Financial Position - Total assets as of December 31, 2023, amounted to RMB 3,289.2 million, a slight increase from RMB 3,268.4 million in 2022[2] - The company's total liabilities increased to RMB 1,065.0 million in 2023 from RMB 909.5 million in 2022[2] - Cash and cash equivalents decreased from approximately RMB 1,642.7 million as of December 31, 2022, to approximately RMB 1,344.6 million as of December 31, 2023[49] - The company has no significant foreign exchange risk as most transactions are settled in RMB[62] Market Outlook - The industrial AI market is projected to grow at a compound annual growth rate of 46% from 2022 to 2032, reaching a market size of $89.5 billion by 2032[23] - According to IDC, by 2026, over 30% of core IT spending by China's top 500 enterprises will be allocated to AI, leading to double-digit growth in product innovation and process improvement[23] - The company aims to support Chinese manufacturing enterprises in expanding overseas markets, exploring "1+N" expansion and "1xN" replication strategies[24] Corporate Governance - The company has adopted corporate governance standards and has complied with all applicable codes during the reporting period[68] - The board recommends not to declare a final dividend for the year ending December 31, 2023[63] - The company has no major contingent liabilities as of December 31, 2023[63]

Financial Performance - Revenue for the six months ended June 30, 2023, was RMB 923.85 million, a 43% increase from RMB 645.62 million in the same period of 2022[7]. - Gross profit for the same period was RMB 298.87 million, up from RMB 205.66 million, reflecting a gross margin improvement[7]. - The company reported an operating loss of RMB 211.05 million, an improvement from a loss of RMB 241.34 million in the prior year[7]. - Net loss for the period was RMB 196.05 million, compared to a loss of RMB 230.16 million in 2022, indicating a narrowing of losses[7]. - Adjusted net loss, excluding certain expenses, was RMB 39.38 million, improved from RMB 59.13 million in the previous year[7]. - The financial performance indicates a positive trend in revenue growth and loss reduction, suggesting potential for future profitability[7]. - The company reported a total comprehensive loss of RMB 233,256 thousand for the six months ended June 30, 2023, compared to a loss of RMB 251,490 thousand for the same period in 2022, indicating an improvement in financial performance[97]. Revenue Breakdown - Revenue from data solutions sales was RMB 867.74 million, accounting for 93.9% of total revenue, while service revenue was RMB 56.11 million, making up 6.1%[8]. - Revenue from system integrators was RMB 546.80 million, representing 59.2% of total revenue, while end-user revenue was RMB 377.05 million, or 40.8%[9]. - The "AI + Manufacturing" business segment generated revenue of RMB 610.5 million, representing an 81.3% year-on-year increase, and accounted for 66.1% of total revenue[11]. - Revenue from the manufacturing sector for the six months ended June 30, 2023, was RMB 610.5 million, representing an increase of 81.3% from RMB 336.8 million for the same period in 2022[29]. - Revenue from the financial services sector for the six months ended June 30, 2023, was RMB 231.6 million, a 5.6% increase from RMB 219.4 million for the same period in 2022[29]. Research and Development - The company continues to invest in AI technology platforms and solutions, driving strong business growth and market position[12]. - The company is focused on optimizing industrial large models and enhancing multimodal capabilities to support more application innovations[24]. - Research and development expenses increased by 2.4% to RMB 223.1 million for the six months ended June 30, 2023, down from 33.7% to 24.1% of revenue[35]. - The company plans to continue investing in research and development to enhance its product offerings and maintain competitive advantage in the market[99]. Market Strategy and Expansion - The company plans to continue expanding its market presence and investing in new product development to drive future growth[7]. - The company is focused on enhancing its technology offerings and exploring strategic partnerships for market expansion[7]. - The company aims to further expand into related industries and continuously iterate AI products and solutions, leveraging the rich industry implementation experience of Shanghai Compass[171]. Shareholder Information - The board of directors did not recommend the payment of an interim dividend for the six months ended June 30, 2023[75]. - The company successfully placed 19,900,000 new H shares at a price of HKD 19.70 per share, representing a discount of approximately 16.17% from the market price of HKD 23.50 on June 6, 2023, with net proceeds estimated at approximately HKD 378.9 million[64]. - The company has adopted an employee incentive plan based on the resolution passed at the shareholders' meeting on March 31, 2021, with 88,271,298 shares held in the incentive platform as of June 30, 2023, of which 88,264,098 shares have been granted[62]. Acquisitions and Investments - The company acquired 51% of Shanghai Compass Information Technology Co., Ltd. for a total consideration of RMB 229.5 million on May 16, 2023[45]. - The acquisition of Shanghai Compass Information Technology Co., Ltd. in May 2023 is expected to enhance the company's technological capabilities and market position[129]. - The total purchase consideration for the acquisition amounted to RMB 201,493,000, with cash consideration paid of RMB 114,750,000 and contingent consideration of RMB 86,743,000[171]. Employee and Operational Expenses - The group had a total of 968 employees as of June 30, 2023, with employee benefit expenses of approximately RMB 288.1 million for the six months ended June 30, 2023, compared to RMB 269.5 million for the same period in 2022, reflecting a year-on-year increase of about 6.0%[60]. - Sales and distribution expenses for the six months ended June 30, 2023, were RMB 91.2 million, a 61.4% increase from RMB 56.5 million in the same period of 2022, representing 9.9% of revenue, up from 8.7%[33]. - General and administrative expenses remained stable at RMB 190.0 million for the six months ended June 30, 2023, compared to RMB 189.2 million in the same period of 2022, with a percentage of revenue decreasing from 29.3% to 20.6%[34]. Financial Position and Liabilities - The company's cash and cash equivalents as of June 30, 2023, were approximately RMB 1,669.5 million, compared to RMB 1,642.7 million as of December 31, 2022[43]. - Total liabilities amounted to RMB 1,254,821 thousand, up from RMB 909,472 thousand at the end of 2022, indicating a 37.9% rise[93]. - The company's borrowings amounted to RMB 901 million, an increase from RMB 576 million as of December 31, 2022, primarily due to short-term borrowings for acquired subsidiaries[55]. Risks and Compliance - The company has no major investment plans or acquisitions of capital assets as of June 30, 2023[54]. - The company has not reported any customer contributing over 10% of total revenue in the first half of 2022, while customer A contributed RMB 113,381 thousand in the first half of 2023[123]. - The company continues to face various financial risks, including foreign exchange risk and credit risk, with no major changes in risk management policies since December 31, 2022[106].

Financial Performance - For the six months ended June 30, 2023, the company's revenue reached RMB 923.9 million, representing a year-on-year increase of 43.1%[2] - Gross profit for the same period was RMB 298.9 million, up 45.3% year-on-year, with a gross margin of 32.4%, an increase of 0.5 percentage points compared to the previous year[6] - Adjusted net loss was RMB 39.4 million, a reduction of 33.4% year-on-year, with an adjusted net loss margin of 4.3%, narrowing by 53.3%[6] - Revenue from product and solution sales was RMB 867.7 million, accounting for 93.9% of total revenue, while data solution services contributed RMB 56.1 million, or 6.1%[3] - Revenue from the financial services sector increased by 5.6% to RMB 231.6 million, compared to RMB 219.4 million for the same period in 2022[23] - The company's overall gross profit for the six months ended June 30, 2023, was RMB 298.9 million, a 45.3% increase from RMB 205.7 million in the previous year[25] - The overall gross margin improved to 32.4%, up from 31.9% for the same period in 2022[25] - The net loss for the six months ended June 30, 2023, was RMB 196.1 million, a decrease of 14.8% compared to a net loss of RMB 230.2 million for the same period in 2022, mainly due to increased revenue and gross profit[34] - Adjusted net loss for the six months ended June 30, 2023, was RMB 39.4 million, compared to RMB 59.1 million for the same period in 2022, reflecting improvements in financial performance[36] - The company reported a net loss attributable to owners of RMB (195,688) thousand for the six months ended June 30, 2023, an improvement from a loss of RMB (233,377) thousand in the same period of 2022, reflecting a reduction of approximately 16%[79] Revenue Breakdown - Revenue from the "AI + Manufacturing" business segment reached RMB 610.5 million, a significant increase of 81.3% year-on-year, accounting for 66.1% of total revenue[6] - Revenue from system integrators was RMB 546.8 million, representing 59.2% of total revenue, while end-users contributed RMB 377.0 million, or 40.8%[4] - Revenue from the manufacturing sector for the same period was RMB 610.5 million, up 81.3% from RMB 336.8 million in the prior year[23] - Total revenue for the six months ended June 30, 2023, was RMB 923,851 thousand, an increase from RMB 645,616 thousand in the same period of 2022, representing a growth of approximately 43%[72] Research and Development - The company applied for a total of 1,181 patents, with 437 granted patents and 227 granted invention patents as of June 30, 2023[7] - Research and development expenses for the six months ended June 30, 2023, were RMB 223.1 million, a 2.4% increase from RMB 217.8 million in the prior year[29] - The company is engaged in research and development of AI-based software and hardware technology solutions, indicating a focus on innovation and market expansion[65] AI Technology and Applications - The company continues to focus on AI technology commercialization, particularly in industrial digital transformation and high-quality development of the manufacturing sector[6] - The company has developed the AInno-15B, a pre-trained large model with 150 billion parameters, aimed at supporting various functions such as text generation and data analysis[10][11] - The company has launched the ChatX series of generative AI applications, including ChatRobot, ChatBI, and ChatDoc, which have been implemented in multiple solutions across manufacturing, data intelligence, and factory logistics[11][13] - The company aims to enhance the accuracy and efficiency of natural language search in its ChatBI product, supporting a wider range of data source formats and providing precise solutions for diverse business intelligence needs[14] - The ChatX series applications, including ChatBI, ChatRobot, and ChatDoc, will be further optimized to enhance service maturity and competitive advantage[18] Financial Position - Cash and cash equivalents as of June 30, 2023, were approximately RMB 1,669.5 million, an increase from RMB 1,642.7 million as of December 31, 2022, primarily due to new share placements and cash outflows from investment and operating activities[37] - The company has a net cash position as of June 30, 2023, and the debt-to-equity ratio is not applicable[38] - Total assets amounted to RMB 3,815,972 thousand, an increase from RMB 3,268,447 thousand as of December 31, 2022, representing a growth of approximately 16.7%[61] - Total liabilities rose to RMB 1,254,821 thousand, up from RMB 909,472 thousand, which is an increase of approximately 37.9%[64] - The company reported a cumulative loss of RMB 1,461,603 thousand as of June 30, 2023, compared to RMB 1,265,915 thousand at the end of 2022, indicating an increase in losses of approximately 15.5%[63] Shareholder Actions - The company repurchased a total of 833,700 shares during the reporting period, with a total cost of RMB 18,174,581[52] - The company did not recommend the payment of an interim dividend for the six months ended June 30, 2023, consistent with the previous year[77] - On January 13, 2023, the company adopted an equity incentive plan to encourage and retain directors and management, enhancing its ability to attract new talent and boost market confidence[94] - As of June 30, 2023, the company granted 25,000,000 restricted shares at HKD 3.056 per share, with a fair value of HKD 15.28 per share on the grant date[95][96] Market Position - The company ranked 3rd in the Chinese computer vision market and maintained 4th place in the machine learning platform market according to IDC's 2022 report[7] - The AIGC industry market size in China is projected to reach RMB 267.4 billion by 2027, with a CAGR of 105% from 2022 to 2027[16]