SHGBIT(SH:603918) Minsheng Securities·2025-04-30 10:23Investment Rating - The report gives a "Recommended" rating for the company, indicating a positive outlook for future performance [3][5]. Core Insights - The company is experiencing a turning point in its performance, with a significant revenue increase of 60% year-on-year in Q1 2025, suggesting a recovery from previous declines [2][22]. - The partnership with Ant Group to develop a diversified dispute resolution platform is a key growth driver, with revenues from this segment expected to exceed 45 million yuan in 2024, reflecting a 221% increase from 2023 [1][33]. - The company has successfully won a bid for the Shanghai High Court's "Digital Court" project, valued at 12.22 million yuan, which enhances its credibility in the AI and judicial technology space [2][35]. Summary by Sections 1. Business Development - The company has established a long-term partnership with Ant Group to create a multi-faceted dispute resolution platform, leveraging AI technology to resolve financial disputes before litigation [1][9]. - The platform has seen a dramatic increase in case volume, with the number of cases handled in 2024 growing several times compared to the previous year, and over 1,800 mediators now registered [1][33]. 2. Financial Performance - In 2024, the company reported a revenue of 699 million yuan, a 25% decline from the previous year, and a net loss of 61 million yuan [4][22]. - However, the company’s operating cash flow reached 85 million yuan in 2024, indicating strong operational resilience despite the profit downturn [27][22]. - The forecast for 2025-2027 shows a recovery with expected revenues of 924 million yuan, 1.16 billion yuan, and 1.45 billion yuan, respectively, with net profits projected to turn positive by 2025 [4][49]. 3. Profitability Forecast - The report anticipates significant growth in net profit, projecting 38 million yuan in 2025, 105 million yuan in 2026, and 190 million yuan in 2027, with respective growth rates of 163% and 173% [3][49]. - The company’s price-to-earnings (PE) ratios for 2025, 2026, and 2027 are projected at 173, 63, and 35 times, respectively, indicating a high valuation relative to earnings [3][51]. 4. Market Position and Strategy - The company is positioned to capitalize on the growing demand for AI applications in the judicial sector, with its products gaining recognition and acceptance in the market [2][35]. - The strategic collaboration with Alibaba Cloud aims to enhance the AI capabilities within the judicial sector, further solidifying the company's market position [38][39].