Zitian Technology(SZ:300280) Great Wall Securities·2024-04-10 16:00Investment Rating - The report gives a "Buy" rating for the company, indicating an expected stock price increase of over 15% relative to the industry index in the next six months [5][42][59]. Core Viewpoints - The company's marketing business is recovering steadily, with significant performance improvement driven by the recovery of advertising demand and the introduction of new AI and cloud services [2][3][4]. - The company is actively expanding into AI and computing power sectors, aiming to create a second growth curve alongside its traditional advertising business [3][4][31]. - The company has successfully signed contracts for Microsoft AI and OpenAI services, indicating strong demand for its new offerings [3][31]. Summary by Sections 1. Marketing Business Recovery - The company's main business, modern advertising services, is showing a robust recovery, with a 45.47% year-on-year increase in advertising revenue in the first half of 2023, reaching 1.206 billion yuan [2][17]. - The domestic advertising revenue share has significantly increased from 8% in 2021 to 63% in 2022 due to the decline in overseas advertising revenue [17][27]. 2. AI and Computing Power Expansion - The company has invested 8.12 billion yuan in high-end server procurement to meet the rising demand for computing power driven by AI applications [3][32]. - The cloud service business has started contributing revenue, achieving 220 million yuan in the first half of 2023, accounting for 15.44% of total revenue [27][28]. 3. Leisure Gaming Business Development - The company is exploring AI and interactive gaming, with its subsidiary, Hippo Games, launching the AI detective game "Detective vs. AI," which achieved high rankings in app stores [4][33]. - Collaborations with well-known IPs and the development of interactive games are expected to contribute to incremental revenue [37][38]. 4. Financial Projections - The company is projected to achieve revenues of 3.35 billion yuan, 4.52 billion yuan, and 5.56 billion yuan for the years 2023, 2024, and 2025, respectively [5][42]. - The expected net profits for the same years are 308 million yuan, 444 million yuan, and 644 million yuan, with corresponding EPS of 1.90 yuan, 2.74 yuan, and 3.97 yuan [5][42].