Transwarp(SH:688031)2024-06-28 09:00Investment Rating - The report maintains a "Buy" rating for the company, indicating an expectation for the stock price to outperform the benchmark index by more than 10% in the next 6-12 months [10][16]. Core Views - The company is focusing on high-value, high-margin software licensing business, which is expected to improve profitability continuously [2][12]. - The recent launch of the "Wuyawen Zhi AI PC version" marks a significant step in deploying edge AI applications, enhancing the company's position in the AI market [2][12]. - The company reported a total revenue of RMB 491 million in 2023, a year-on-year increase of 31.72%, driven by an increase in basic software orders [2][3]. Summary by Sections Financial Performance - In 2023, the company achieved total revenue of RMB 491 million, up 31.72% year-on-year, with a gross margin of 59.6%, an increase of 3.1 percentage points from the previous year [2][3]. - The net profit attributable to the parent company for 2023 was a loss of RMB 288 million, which is a year-on-year increase in losses by 6.23% due to increased R&D and sales expenses [2][3]. - For Q1 2024, revenue reached RMB 62.73 million, a 46.0% year-on-year growth, with gross margin further improving to 69.3%, up 17.7 percentage points year-on-year [2][3]. Product Development - The company has developed a comprehensive product layout, including the Transwarp Hippo distributed vector database and the Wuyawen Zhi edge AI model, which enhances its core competitive advantage [2][12]. - The vector database offers efficient similarity search and matching capabilities, allowing the edge AI model to extract key information from vast data quickly, thus improving retrieval efficiency [2][12]. Future Projections - The forecast for net profit attributable to the parent company for 2024-2026 is projected at RMB -137 million, RMB 1 million, and RMB 77 million respectively, with corresponding EPS of RMB -1.14, RMB 0.01, and RMB 0.63 [2][3]. - The company is expected to maintain a strong growth trajectory with revenue growth rates projected at 39.7% for 2024 and 32.1% for 2025 [3][12].