NANCAL(SH:603859) Guotou Securities·2024-10-23 10:03Investment Rating - The report maintains a "Buy - A" investment rating for the company, with a 6-month target price of 27.48 CNY [3][8]. Core Views - The company has signed four major contracts this year, totaling over 600 million CNY, which accounts for more than 40% of its audited revenue for 2023. This indicates a strong foundation for annual performance growth and reflects the company's competitive strength [2][8]. - The collaboration with Huawei is enhancing the company's capabilities in AI applications, particularly in the manufacturing sector, which is expected to drive revenue growth and market share expansion [3][8]. Summary by Sections Major Contracts - On October 22, the company announced a contract worth approximately 145 million CNY related to AI large model applications, marking the fourth major contract signed this year, with a total value of about 270 million CNY for the two contracts disclosed on March 23 and October 22 [1][2]. - The contracts signify strong demand for domestic alternatives to imported equipment in sectors like nuclear power and energy, showcasing the company's ability to leverage AI in traditional industries [2][3]. Financial Projections - The company is projected to achieve revenues of 1.91 billion CNY, 2.33 billion CNY, and 2.78 billion CNY for the years 2024, 2025, and 2026, respectively. Net profits are expected to be 305.6 million CNY, 399.5 million CNY, and 479.3 million CNY for the same years [8][10]. - The report anticipates a dynamic price-to-earnings ratio of 22 times for 2024, indicating a favorable valuation outlook [8]. Market Position and Strategy - The company aims to be a partner in the digital transformation of manufacturing enterprises and a facilitator of AI applications in high-end equipment manufacturing. The partnership with Huawei is expected to enhance its revenue scale and vertical market share [8][10]. - The integration of the company's self-developed industrial software with Huawei's ecosystem is expected to create a robust AI industry application platform, further solidifying its market position [3][8].