IFLYTEK(SZ:002230) Southwest Securities·2024-08-28 06:00Investment Rating - The report maintains a "Buy" rating for the company [1] Core Views - The company achieved a revenue of 9.32 billion yuan in the first half of 2024, representing a year-on-year growth of 18.9%. However, the net profit attributable to shareholders was a loss of 400 million yuan, compared to a profit of 73.57 million yuan in the same period last year, with a non-recurring net profit decline of 58.9% [2] - The company is investing heavily in R&D, with over 650 million yuan allocated to the development of large models and core technologies, which has impacted short-term profits. Despite this, gross margin and cash collection metrics have improved, with total sales collections reaching 9 billion yuan, an increase of 1.5 billion yuan year-on-year [2] - The company's AI-enabled core businesses in education, automotive, and healthcare have shown significant growth, offsetting declines in government sector revenues. The education segment generated 2.86 billion yuan, up 25.1%, while the automotive segment saw a 65.5% increase to 350 million yuan [2] - The company plans to issue medium-term notes to fund AI investments and has seen confidence from executives, who plan to increase their holdings by at least 20 million yuan within six months [2] Summary by Sections Financial Performance - Revenue for 2023 was 19.65 billion yuan, with projections of 22.99 billion yuan for 2024, reflecting a growth rate of 17.01%. The net profit attributable to shareholders is expected to decline by 10.55% in 2024, with EPS projected at 0.25 yuan [4][3] - The gross margin for H1 2024 was 40.2%, a slight increase of 0.06 percentage points year-on-year. The company has managed to reduce sales, management, and R&D expense ratios, indicating improved cost control [2] Market Position and Growth Potential - The company is recognized as a leading player in the AI sector in China, with substantial capabilities in computing power, algorithms, and data. The report suggests that the company has significant growth potential and is approaching an inflection point in performance [3] Future Outlook - EPS forecasts for 2024, 2025, and 2026 are 0.25 yuan, 0.46 yuan, and 0.62 yuan respectively, indicating a positive long-term outlook despite short-term challenges [3]