Investment Rating - The report maintains a "Buy" rating for the company with a target price of RMB 21.97 [7][5]. Core Views - The company's revenue for the first half of 2025 reached RMB 601 million, a year-on-year increase of 15.60%, but the net profit attributable to shareholders decreased by 40.93% to RMB 34.99 million, primarily due to the digital culture business being in an investment phase, leading to rapid revenue growth without profitability [1][2]. - The company is committed to advancing its "Design + Technology" strategy, enhancing research and development in areas such as artificial intelligence and BIM, and integrating AI throughout the design process to strengthen its core competitiveness [4][5]. Summary by Sections Financial Performance - In Q2 2025, the company achieved revenue of RMB 337 million, a year-on-year increase of 15.79% and a quarter-on-quarter increase of 27.50%. However, the net profit was RMB 32.51 million, down 42.07% year-on-year but up 1213.38% quarter-on-quarter, which was below expectations due to the digital culture business's ongoing investment phase [1][2]. - The overall gross margin for the first half of 2025 was 24.57%, down 3.17 percentage points year-on-year, largely due to the digital culture business's negative gross margin of -17.43% [2][3]. Cost and Cash Flow - The company's expense ratio improved to 15.83%, down 2.6 percentage points year-on-year, with reductions in sales, management, and R&D expenses [3]. - Operating cash flow showed a net outflow of RMB 183 million, a year-on-year increase in outflow of RMB 59 million, primarily due to investments in the digital culture business [3]. Strategic Initiatives - The company has been a leader in BIM research since 2008 and has developed various platforms to enhance its digital capabilities. It is also expanding AI applications in design, including the launch of an industry-level C-end product [4]. - The company is actively expanding its creative cultural industry chain and has initiated the construction of an AI Agent platform for the architecture industry [4]. Profit Forecast and Valuation - The company is projected to have net profits of RMB 1.08 billion, RMB 970 million, and RMB 930 million for 2025 to 2027, respectively. The report assigns a PE ratio of 40 times for 2025, reflecting the company's strong position in the market and its potential to benefit from AI integration [5][11].

Group 1: Company Strategy and Market Outlook - The company aims for high-quality development in response to the new industry landscape, focusing on market expansion and business structure optimization [2] - The construction industry is expected to stabilize with increased support for real estate policies and demand for affordable housing, leading to new market opportunities [2][5] - AI technology is transforming the design logic and efficiency in the construction industry, paving the way for higher quality and innovative development [3] Group 2: Technological Advancements - The company has invested significantly in BIM and AI technologies, enhancing its design capabilities and project management through platforms like CAPOL iBIM [6][7] - The integration of AI in design processes is being accelerated, with the company joining the Baidu PaddlePaddle technology partner program to explore AI applications [7] - The company has developed a comprehensive online management platform that integrates various data sources for improved project management [6][8] Group 3: Financial Performance and Shareholder Returns - The company plans to distribute at least 40% of its annual distributable profits as cash dividends, with a proposed dividend of 3.5 CNY per share for 2024, amounting to 55% of net profit [9] - The company reported a 22.55% decline in revenue due to the cyclical downturn in the real estate sector, affecting all business segments [15] - As of the end of 2024, the company has over 1 billion CNY in cash reserves, ensuring sufficient funding for business development [12] Group 4: Business Expansion and Market Position - The company has established a strong presence in the Guangdong-Hong Kong-Macao Greater Bay Area, with plans to expand internationally along the Belt and Road Initiative [11] - The newly established Huayang Digital Culture (Jiangxi) Co., Ltd. focuses on the micro-short drama business, with a team of over 100 people [10] - The company emphasizes continuous innovation in design and technology to meet the evolving demands for quality housing, including green and safe living environments [4]