Summary of Tax Friend Co., Ltd. Conference Call Company Overview - **Company**: Tax Friend Co., Ltd. (税友股份) - **Industry**: Financial and Tax IT Services - **Established**: 1999, initially focused on government IT services through the Golden Tax Project Key Points and Arguments - **Market Opportunities**: The implementation of the Golden Tax Phase IV and tax system reforms provide new application scenarios and product opportunities for financial and tax IT companies like Tax Friend, benefiting SaaS transformation enterprises [2][3] - **Revenue Growth**: Tax Friend's B-end (enterprise) revenue is projected to reach 1.177 billion yuan in 2024, surpassing G-end (government) revenue of 763 million yuan, indicating a shift in business focus and rapid growth in the B-end sector [2][6] - **SaaS Transformation**: The company's future growth hinges on continuous SaaS transformation, leveraging big data and AI technologies to enhance product performance and expand application scenarios while maintaining stable expense and gross profit margins [2][7] - **AI Applications**: AI technology is enhancing tax compliance efficiency and reducing costs, allowing consultants to serve more clients and meet the advanced compliance needs of SMEs [2][10][12] - **Cloud Product Launch**: Tax Friend has introduced a managed cloud product to create an ecosystem for the bookkeeping industry, integrating bookkeeping services and improving service quality while aiming to acquire 500,000 clients [2][14] Financial Projections - **Revenue Forecast**: Expected revenues for 2025, 2026, and 2027 are projected at 2.215 billion, 2.766 billion, and 3.724 billion yuan respectively, with profits expected to grow steadily [2][16] - **Historical Growth**: Overall revenue has increased from 743 million yuan in 2016 to a projected 1.945 billion yuan in 2024, with a compound annual growth rate (CAGR) of approximately 12.5% [6] Industry Dynamics - **Regulatory Changes**: The Golden Tax Phase IV has enabled comprehensive tax oversight, increasing compliance demands from enterprises and promoting the application of AI in the financial and tax sectors [2][9] - **Data Policy Impact**: Changes in data element policies provide significant expansion opportunities for the company in the tax data field, directly linked to business operations [2][17] Operational Insights - **Business Model**: Tax Friend operates a dual model with G-end project-based services and B-end SaaS systems, enhancing service delivery for enterprises and bookkeeping companies [2][8] - **Market Expansion**: The company has successfully expanded its market share, particularly in the B-end sector, despite previous losses in G-end operations [2][8] Emerging Trends - **AI in Bookkeeping**: The introduction of AI technology is transforming the bookkeeping industry, with Tax Friend aiming to create a platform similar to Beike, enhancing service quality and client management [2][13] - **Client Acquisition Goals**: The company has acquired 12,000 clients and aims to reach 500,000, with a revenue model based on service fees and revenue sharing [2][14] Conclusion - **Investment Rating**: Given the company's growth potential and favorable market conditions, a "buy" rating is maintained [2][16]

Group 1 - The company has been a leading player in the domestic tax and finance IT sector for over 20 years, providing tax system development and operation services to tax authorities, as well as comprehensive financial and tax services to enterprises and intermediaries [1] - The company's revenue has shown stable growth, increasing from 743 million yuan in 2016 to 1.945 billion yuan in 2024, with a compound annual growth rate (CAGR) of 12.8% [1] - The overall gross profit margin has remained relatively stable, with a slight decrease from 58.68% in 2016 to 55.21% in 2024, while the gross profit margin for B-end business has increased from 68.6% in 2021 to 72.0% in 2024 [1] Group 2 - The G-end business is expected to maintain steady growth, driven by increasing demand for data-related services as the government promotes tax management reforms [2] - The company is leveraging AI technology to enhance its B-end business, particularly in tax compliance and optimization, with new services gaining market recognition and entering a phase of full promotion [2] - The company is actively expanding its financial and tax data element business, which is crucial for government data applications, and is expected to create new growth opportunities [2] Group 3 - Revenue projections for the company are estimated to reach 2.215 billion yuan in 2025, 2.766 billion yuan in 2026, and 3.724 billion yuan in 2027, with net profits of 192 million yuan, 322 million yuan, and 553 million yuan respectively [3] - The gross profit margins are expected to improve to 55.9% in 2025, 58.5% in 2026, and 61.1% in 2027, with price-to-sales (PS) ratios projected to be 9.43, 7.55, and 5.61, which are below the average of comparable companies [3] - Given the company's high growth potential and valuation levels, an "accumulate" rating has been assigned [3]

Investment Rating - The report maintains a "Positive" investment rating for the industry [9] Core Viewpoints - The report highlights the ongoing growth of the AI industry in China, particularly following the WAIC 2025 conference, which showcased significant advancements in AI technology and applications [8][53] - It emphasizes the potential of domestic AI models and related infrastructure, suggesting a focus on domestic model manufacturers, AI intelligent entities, and the domestic computing power supply chain [8][53] Summary by Sections Market Performance - The computer sector experienced a slight increase of 1.59% last week, ranking 25th among major industries in the Yangtze River region, with a market share of 8.31% in total trading volume [2][6][16] Key Events - The WAIC 2025 conference took place, featuring over 800 companies and showcasing more than 3,000 cutting-edge exhibits, marking the largest scale in its history [8][40] - The National Data Bureau held a press conference regarding the progress of the data element comprehensive pilot zone construction, indicating a push towards data marketization [30][35] Recommendations - The report recommends focusing on: 1. Domestic large model manufacturers 2. AI intelligent entity-related stocks 3. Domestic computing power supply chain 4. Domestic computing infrastructure-related stocks 5. High-quality data-related stocks [8][53] Industry Developments - The report notes the continuous evolution of the open-source ecosystem in China, with significant projects and collaborations emerging from the WAIC conference [22][29] - It highlights the increasing importance of data elements and their marketization, with pilot zones established in multiple provinces to explore data value realization [30][36]

Summary of Key Points from Conference Call Records Industry or Company Involved - **AIDC and AI Education Sector**: The records discuss developments in the AIDC industry, particularly related to NVIDIA's H20 chip, and advancements in AI applications in education. Core Points and Arguments 1. **NVIDIA H20 Chip Release**: NVIDIA's CEO announced the approval of the H20 chip for sales to China, which is expected to accelerate domestic data center construction. The H20 chip has one-sixth the computing power of the H100 but offers competitive advantages in bandwidth and memory [2][12]. 2. **Increased Capital Expenditure**: Institutions predict that major domestic companies will increase their capital expenditures (Capex) due to the availability of the H20 chip, marking a turning point in AI infrastructure development in China [2][12]. 3. **AI in Education**: A shift towards "proactive output" AI products in education is anticipated, with several companies expected to launch AI agents that can replace human teachers in certain capacities. This trend is expected to gain momentum starting in 2025 [6][7]. 4. **Growth in AI Applications**: A report from A16Z indicates that global budgets for AI applications are expected to grow significantly, with an average increase of about 75% in the coming year as companies explore more use cases for AI [9][10]. 5. **Core Companies in AI Education**: Companies like Fangzhitech and Dou Shen Education are highlighted for their innovative AI educational products, which are expected to drive growth in the sector [7][8]. Other Important but Possibly Overlooked Content 1. **Market Dynamics**: The records mention that the AI application forum will take place on July 18, 2025, focusing on the integration of software and hardware in AI applications [9]. 2. **Financial Performance**: Companies like Lio Co. are expected to report significant improvements in net profit, driven by optimized customer structures in their digital marketing segments [19][20]. 3. **Regulatory Developments**: The approval of new drugs by companies like Lisheng Pharmaceutical indicates a growing market for innovative healthcare solutions, particularly in the treatment of Alzheimer's disease [16][17]. 4. **Investment Opportunities**: The records suggest potential investment opportunities in companies involved in AI, healthcare, and data center infrastructure, particularly those that are adapting to new technologies and market demands [19][20]. This summary encapsulates the key insights and developments from the conference call records, providing a comprehensive overview of the current trends and future expectations in the AIDC and AI education sectors.

Investment Rating - The report maintains a positive outlook on the computer industry for Q2 2025, indicating an expected improvement in performance [2][4]. Core Insights - The report predicts a gradual recovery in industry profits starting from Q2 2025, with revenue growth rates of 5% and 21% for Q4 2024 and Q1 2025 respectively, and net profit growth rates of -68% and 82% [4][5]. - A total of 55 tracked A-share and Hong Kong-listed computer companies are analyzed, with 13 companies expected to achieve over 50% net profit growth, representing 23.6% of the sample [4][5]. - The report identifies key investment targets across various segments, including AIGC, digital economy leaders, and data innovation [4][5]. Summary by Category Company Performance Predictions - Companies with over 50% net profit growth include: - Jinzheng Co. (4493%) - Zhongke Chuangda (333%) - Zhina Zhen (313%) - Kalait (265%) - Hengsheng Electronics (233%) [4][5][6]. - Companies with 30%-50% net profit growth include: - Dameng Data (48%) - Fanwei Network (39%) - New Point Software (38%) [4][5][6]. - Companies with 0%-30% net profit growth include: - Dongfang Caifu (27%) - Haiguang Information (27%) - Desai Xiwai (27%) [4][5][6]. - Companies with -30% to 0% net profit growth include: - Weining Health (-4%) - Nova Star Cloud (-11%) [4][5][6]. - Companies with less than -30% net profit growth include: - Qiming Star (-30%) - Top Point Software (-36%) [4][5][6]. Key Investment Targets - AIGC Segment: Jinshan Office, Wanxing Technology, Daotong Technology, Hongsoft Technology, and others [4]. - Digital Economy Leaders: Hikvision, Jinshan Office, Hengsheng Electronics, and others [4]. - Data Innovation: Haiguang Information, Ruantong Power, Suocheng Technology, and others [4]. - AIGC Computing Power: Langchao Information, Haiguang Information, and others [4].

Investment Rating - The report maintains a positive investment rating for the domestic computing power and AI application sectors, highlighting significant growth potential in these areas [6]. Core Insights - A new round of AI "arms race" has commenced globally, with the release of major models like Grok4 and Kimi K2 expected to significantly boost domestic computing power demand and application ecosystems [4][10]. - The report emphasizes the importance of focusing on domestic AI computing power, particularly in chip design, advanced wafer manufacturing, and liquid cooling technologies [4]. - Various AI application sectors are highlighted, including office automation, programming, terminal AI, ERP/CRM, judicial applications, financial/taxation services, education, healthcare, and customer service [4]. Summary by Sections Market Review - During the week of July 7-11, the CSI 300 index rose by 0.82%, the SME index increased by 0.73%, and the ChiNext index saw a rise of 2.36%. The computer sector (CITIC) experienced a growth of 3.37% [2]. Industry News - Notable company developments include Zhuoyi Information's plan to reduce its shareholding by up to 2,271,445 shares, representing no more than 1.88% of total shares [3]. - Wanjie Technology received nine invention patent certificates from the National Intellectual Property Administration [3]. Weekly Insights - The report suggests focusing on key players in the domestic AI computing power sector, such as Cambrian and Haiguang Information in chip design, and SMIC in advanced wafer manufacturing [4]. - The report also identifies various AI application companies across different sectors, including Kingsoft Office, Hehe Information, and Keda Xunfei in office automation and education [4]. Recent Developments - The report outlines significant investments and acquisitions in the AI sector, including Amazon's potential additional investment in Anthropic and Google's acquisition of AI programming startup Windsurf's core talent and technology [16][17]. - The report notes that xAI, led by Elon Musk, is negotiating a new funding round that could value the company at up to $200 billion, reflecting the growing interest and investment in AI technologies [10][18]. AI Application Ecosystem - The report highlights the rapid growth of AI applications, with OpenAI and Anthropic achieving annual recurring revenues (ARR) of $10 billion and $3 billion, respectively [22]. - Domestic AI applications like deepseek and Doubao are showing significant commercial potential, with user engagement metrics comparable to leading international AI applications [22]. Global AI Company Rankings - The report provides a ranking of global AI companies based on their ARR, with OpenAI leading at $10 billion, followed by Anthropic at $3.008 billion [23].

Group 1 - Taxfriend Co., Ltd. (税友股份) has successfully won a bid for the upgrade and maintenance of the blockchain pilot application system for the Shanghai Municipal Taxation Bureau, with a contract value of 3.39 million yuan [1] - The company has over 20 years of experience in the tax digitalization field, establishing a solid brand foundation through its leading technology and application experience [1] - Taxfriend has participated in significant national tax reforms, including individual income tax system reform, big data tax risk management, and the development and operation of the national electronic invoice system [1] Group 2 - According to the 2024 annual report, Taxfriend aims to leverage its competitive advantage as a digital governance efficiency promoter to accelerate the modernization of China's governance system and capabilities [2] - The company plans to become a core supplier in individual tax governance and a leader in corporate tax governance, while maintaining its position as a core supplier for the Golden Tax Phase IV project [2] - Taxfriend is focusing on data-driven governance services and products, integrating large model technology with government applications, and developing intelligent applications in tax governance [2]

Core Viewpoint - The controlling shareholder of Taxfriend Co., Ltd. (税友股份) plans to reduce its stake in the company again, citing personal funding needs, following a previous reduction completed just two months ago [1][2]. Group 1: Shareholder Reduction Plans - The controlling shareholder, Ningbo Sichuang Investment Partnership, intends to reduce its holdings by up to 12.2 million shares, representing no more than 3% of the total share capital [1]. - Previously, in February, Ningbo Sichuang announced a plan to reduce its stake by up to 8.1353 million shares, which was completed two months later, amounting to approximately 352 million yuan [2]. Group 2: Company Performance - Taxfriend has experienced fluctuations in performance, with revenue and net profit declining over the past three years. Revenue figures were 1.605 billion yuan in 2021, 1.698 billion yuan in 2022, and 1.829 billion yuan in 2023, while net profit figures were 231 million yuan, 144 million yuan, and 83.39 million yuan respectively [3]. - In 2024, Taxfriend reported revenue of 1.945 billion yuan, a year-on-year increase of 6.38%, with net profit and net profit after deducting non-recurring gains and losses at 113 million yuan and 82.17 million yuan, reflecting growth rates of 35.01% and 35.65% respectively [3]. Group 3: Business Segments - The company's revenue from its smart tax business and digital government business reached 1.177 billion yuan and 763 million yuan respectively, with year-on-year growth rates of 8.46% and 3.37% [4]. - The gross profit margins for these segments were 72.04% and 29.12%, with slight changes of -1.82 and +0.26 percentage points year-on-year [4].

Group 1: Shareholding and Reduction Plan - Taxfriend Co., Ltd. announced a share reduction plan by its controlling shareholder, Ningbo Sichuang Venture Capital Partnership, which holds 214,960,498 shares, accounting for 52.85% of the total share capital [1] - Ningbo Sichuang plans to reduce its holdings by no more than 12,202,897 shares, representing up to 3% of the total share capital, with a portion to be sold through centralized bidding and block trading [1] Group 2: Financial Performance - In 2024, the company achieved operating revenue of 1.945 billion yuan, a year-on-year increase of 6.38%, and a net profit attributable to shareholders of 112.58 million yuan, up 35.01% [2][3] - The net profit attributable to shareholders after deducting non-recurring gains and losses was 82.17 million yuan, reflecting a growth of 35.65% compared to the previous year [2][3] - The net cash flow from operating activities was 273.78 million yuan, showing a 12.12% increase from the previous year [3] Group 3: Historical Financial Data - The net profit attributable to shareholders from 2020 to 2024 was 302.2 million yuan, 230.8 million yuan, 143.9 million yuan, 83.39 million yuan, and 112.6 million yuan respectively [4] - The company's total assets increased to 4.149 billion yuan in 2024, a 7.72% increase from 2023 [3] Group 4: Quarterly Performance - In Q1 2025, the company reported operating revenue of 449 million yuan, a year-on-year increase of 23.72%, but a net profit decline of 24.50% to 24.75 million yuan [6] - The net cash flow from operating activities was negative at -37 million yuan for Q1 2025 [6] Group 5: Initial Public Offering - Taxfriend Co., Ltd. was listed on the Shanghai Stock Exchange on June 30, 2021, with an issuance of 40.59 million shares at a price of 13.33 yuan per share, raising a total of 541.06 million yuan [7]

Core Viewpoint - The major shareholder of Taxfriend Software Group Co., Ltd. plans to reduce its stake in the company by up to 12,202,897 shares, representing a maximum of 3% of the total share capital, due to personal funding needs [1]. Shareholder Information - The controlling shareholder, Ningbo Sichu Venture Capital Partnership (Limited Partnership), holds 214,960,498 shares, accounting for 75.54% of the total share capital, all of which are tradable shares [1]. - The shareholder has a direct holding of 52.85% and is identified as a major shareholder [1]. Reduction Plan Details - The reduction plan includes selling up to 12,202,897 shares, with a breakdown of 4,067,632 shares through centralized bidding and 8,135,265 shares through block trading [1]. - The reduction period is set from July 28, 2025, to October 27, 2025 [1]. - The shares intended for reduction were acquired before the IPO [1]. Compliance and Commitments - The major shareholder has made commitments regarding the holding period and conditions for share reduction, including not transferring shares during the lock-up period and adhering to specific price conditions post-lock-up [2][3][4]. - The planned reduction aligns with previously disclosed commitments and complies with relevant laws and regulations [6].