Investment Rating - Buy (Maintained) [2] Core Views - Traditional operator business is under pressure, but vertical industry digitalization in the "Three New Businesses" is driving growth [2] - BSS revenue declined by 18.1% YoY in 1H24 due to cost reductions by operator clients, while "Three New Businesses" revenue grew by 6.8% YoY to 40.1% of total revenue [2] - The company's strong cash flow supports its dividend policy, with a 40% payout ratio of net profit for 2024 [2] Business Performance BSS Business - BSS revenue in 1H24 was RMB 17.94 billion, down 18.1% YoY, primarily due to operator cost reductions and delayed order progress [2] - The company is accelerating AI-driven BSS innovation, with 56 "AI + BSS" projects signed in 1H24, representing a 55% increase in order value [2] Three New Businesses - OSS revenue in 1H24 was RMB 2.80 billion, down 1.6% YoY, but the company has successfully implemented over 10 "AI + OSS" commercial cases [2] - Vertical industry digitalization revenue grew 34.6% YoY to RMB 4.73 billion in 1H24, driven by energy, transportation, and government sectors [2] - Digital operations revenue was RMB 4.47 billion in 1H24, down 1.9% YoY, but the decline has narrowed compared to 2023 [2] Financial Performance - 1H24 revenue was RMB 29.94 billion, down 8.8% YoY, with a net loss of RMB 0.7 billion and a net loss margin of 2.3% [2] - Gross profit margin was 24.7%, down 10.2 pct YoY, due to revenue decline and rigid cost structure [2] - The company expects BSS revenue decline to narrow significantly in 2H24 and digital operations revenue to recover [2] Valuation and Forecast - 2024-2026 net profit forecasts are adjusted to RMB 584 million, RMB 698 million, and RMB 789 million, respectively, with YoY growth rates of 9.6%, 19.8%, and 12.9% [2] - The current stock price of HKD 5.2 implies an 8x PE for 2024, offering valuation safety and high dividend appeal [2] Financial Statements Income Statement - 2024E revenue is forecasted at RMB 7.726 billion, with net profit of RMB 584 million [3] - EPS for 2024E is projected at RMB 0.62 [3] Balance Sheet - Total assets are expected to grow from RMB 11.285 billion in 2023 to RMB 14.989 billion in 2026 [4] - Net cash position is forecasted to decline from RMB 2.638 billion in 2023 to a net debt of RMB 771 million in 2026 [4] Cash Flow Statement - Operating cash flow is expected to increase from RMB 582 million in 2023 to RMB 1.708 billion in 2026 [5] - Free cash flow is projected to improve from a negative RMB 1.296 billion in 2023 to a negative RMB 430 million in 2026 [5]
亚信科技：2024年中期业绩点评：1H24运营商业务承压，优秀现金流保障分红政策