Core Viewpoint - TaxFriend Co., Ltd. is positioned as a leading provider of financial and tax information services in China, expected to benefit significantly from the deepening reforms in the financial and tax system, achieving growth through both government (G-end) and business (B-end) sectors, while the integration of AI with financial and tax services is anticipated to open up long-term growth opportunities [1] Financial Performance - In the first half of 2025, the company's intelligent financial and tax business generated revenue of 621 million yuan, reflecting a year-on-year growth of 11.95% [1] - The platform had 11.8 million active enterprise users, an increase of 10.28% from the beginning of the year, with 7.78 million paying enterprise users, up by 10.04% [1] AI Integration and Product Development - The company has achieved commercialization validation and sales across multiple scenarios through its AI-driven products and services, with the revenue from these offerings (including intelligent accounting and compliance consulting) accounting for 26.59% of the total sales revenue in the intelligent financial and tax business, an increase from approximately 20% reported in 2024 [1] - The "Xiyou" financial and tax domain model is being utilized to enhance the three-tier value system of financial and tax services, focusing on practical tax services, compliance tax advantages, and operational empowerment [1] Market Expansion - TaxFriend has entered the non-tax client market by being selected for the Ministry of Human Resources and Social Security's data governance service project, achieving breakthroughs in the digital government market related to comprehensive tax management and refined oil analysis and monitoring [1] - The company has established project collaborations in various regions, including Yunnan, Xinjiang, Guangxi, Zhejiang, and Shanghai [1]

Core Viewpoint - Taxfriend Co., Ltd. is positioned as a leading player in the financial and tax informationization sector, with a focus on AI product integration and rapid growth in data value services, leading to a "buy" rating from analysts [1][2]. Financial Performance - In the first half of 2025, the company achieved an operating revenue of 922 million yuan, representing a year-on-year growth of 13.25%. However, the net profit attributable to shareholders decreased by 19.52% to 71.01 million yuan [3]. - The updated profit forecasts for 2025-2027 are 212 million, 332 million, and 498 million yuan respectively, with corresponding EPS of 0.52, 0.82, and 1.22 yuan per share [2]. Business Segments - The B-end smart tax business generated 621 million yuan in revenue, up 11.95% year-on-year, with active enterprise users reaching 11.8 million, a growth of 10.28% from the beginning of the year. Paid enterprise users increased by 10.04% to 7.78 million [4]. - The G-end digital government business reported revenue of 300 million yuan, a 16.60% increase, with data value services contributing 91.02 million yuan, up 17% [5]. AI Integration and Future Prospects - AI-driven products and services accounted for 26.59% of the sales revenue in the smart tax business, an increase from approximately 20% in the 2024 annual report, indicating a growing trend in AI integration [4]. - The company is leveraging its "Xiyou" financial and tax domain model to enhance service capabilities across three value tiers: practical tax services, compliance tax optimization, and operational empowerment, suggesting promising future growth [4].

Investment Rating - The investment rating for the company is "Buy" (maintained) [5] Core Views - The company is a leading provider of financial and tax information services in China, expected to benefit from the deepening reforms in the financial and tax system, achieving growth through both G-end and B-end dual drivers. The integration of AI in financial and tax services is anticipated to open up long-term growth opportunities [5] Financial Performance Summary - In the first half of 2025, the company achieved operating revenue of 922 million yuan, a year-on-year increase of 13.25%, and a net profit attributable to shareholders of 71.01 million yuan, a year-on-year decrease of 19.52% [6] - The company's smart financial and tax business generated operating revenue of 621 million yuan in the first half of 2025, reflecting a year-on-year growth of 11.95%. The number of active enterprise users on the platform reached 11.8 million, a growth of 10.28% from the beginning of the year [7] - The G-end business showed signs of recovery, with digital government services generating operating revenue of 300 million yuan, a year-on-year increase of 16.60% [8] Earnings Forecast - The revised profit forecasts for 2025-2027 are 212 million, 332 million, and 498 million yuan respectively, with corresponding EPS of 0.52, 0.82, and 1.22 yuan per share. The current stock price corresponds to P/E ratios of 104.0, 66.4, and 44.3 times for the respective years [5][9] Revenue Breakdown - The revenue from data value services and products reached 91.02 million yuan, a year-on-year increase of 17%. The company has established five main product lines in the tax customer market, achieving rapid promotion [8]

Core Viewpoint - The company is experiencing short-term pressure on its business performance, but there are expectations for improvement in the fundamentals by 2025 due to accelerating fiscal and tax reforms and the ongoing development of the digital economy [2][5]. Financial Performance - In Q1 2025, the company reported revenue of 1.173 billion yuan, a year-on-year decrease of 22.71%, and a net profit attributable to shareholders of -315 million yuan [1]. - For the full year 2024, the company achieved revenue of 8.309 billion yuan, down 33.93% year-on-year, with a net profit attributable to shareholders of 15.95 million yuan, compared to 203 million yuan in the same period of 2023 [1]. Business Segments - In 2024, the digital tax business generated revenue of 3.547 billion yuan, a decline of 40.23%, with a gross margin of 33.56%, down 8.99 percentage points [3]. - The smart products business reported revenue of 2.310 billion yuan, also down 40.20%, with a gross margin of 17.49%, an increase of 0.82 percentage points [3]. - The cybersecurity business generated revenue of 2.389 billion yuan, a decrease of 12.97%, with a gross margin of 15.33%, down 3.26 percentage points [3]. Cost Management - The company maintained stable expense ratios in 2024, with sales, management, and R&D expense ratios at 7.57%, 11.65%, and 8.26%, respectively, reflecting increases of 1.33 percentage points, 3.19 percentage points, and 1.01 percentage points year-on-year [3]. Strategic Developments - The company is advancing in the digital government sector, successfully delivering projects for the National Taxation Administration and expanding its business with multiple ministries [4]. - In the enterprise digitalization sector, the company aims to establish itself as a leading digital tax enterprise, maintaining the highest market share in electronic tax invoices [4]. - The company has also expanded its international business, securing projects in Hong Kong and other regions, with a total project value exceeding 3 billion Hong Kong dollars [4]. Future Outlook - The company is expected to benefit from the acceleration of fiscal and tax reforms, with projections for revenue of 9.563 billion yuan, 10.813 billion yuan, and 11.995 billion yuan for 2025 to 2027, respectively, and net profits of 189 million yuan, 320 million yuan, and 415 million yuan [6].