Investment Rating - The investment rating for the company is "Buy" with a target price of RMB 16.17 [8][19]. Core Views - The company reported a revenue of RMB 1.029 billion for 2024, a year-on-year decrease of 11.52%, and a net profit attributable to the parent company of RMB 38.63 million, down 85.16% year-on-year. However, the company achieved a significant quarter-on-quarter revenue increase of 213.32% in Q4 2024 [1][5]. - The decline in revenue is primarily attributed to a slowdown in downstream demand in traditional industries such as industrial communication. Despite this, there is optimism regarding high growth in the company's industrial OS revenue in 2025 due to domestic substitution trends and the mass production of robots driving industrial control product demand [1][2]. Summary by Sections Financial Performance - In 2024, the company's industrial network communication business generated revenue of RMB 661 million, down 3.87% year-on-year, while the intelligent controllers and solutions business saw a revenue drop of 37.43% to RMB 227 million. Conversely, the industrial operating system and related software services revenue increased by 25.80% to RMB 140 million [2]. - The company expects a recovery in profitability as it focuses on expanding its industrial software products and reducing lower-margin businesses [2]. Market Opportunities - The Ministry of Industry and Information Technology issued guidelines for updating industrial operating systems and software, aiming to complete the replacement of 800,000 industrial operating systems and 2 million software units by 2027. This policy is expected to accelerate domestic substitution, benefiting the company's industrial software business [3]. - The company has signed large-scale application agreements with over 20 enterprises in sectors such as semiconductors and robotics, indicating strong demand for its industrial OS [3]. Product Development - The company launched an AI controller integrated with its industrial operating system and software, aimed at providing a comprehensive control platform for embodied robots. This product is expected to benefit from the ongoing trend of robot mass production [4]. - The development of the MaVIEW Robo software for intelligent robots is designed to be compatible with mainstream robotic arms and humanoid robot joints, targeting applications in sorting, painting, welding, and assembly [4]. Earnings Forecast and Valuation - The earnings per share (EPS) forecast for 2025-2027 is RMB 0.13, RMB 0.23, and RMB 0.33, respectively. The company’s target market capitalization for 2026 is set at RMB 9.94 billion, with a revised target price of RMB 16.17, reflecting an increase in valuation multiples for both software and hardware businesses [5][19]. - The software business is expected to grow at a compound annual growth rate (CAGR) of 102% from 2025 to 2026, significantly higher than the average of comparable companies [5][17].

Financial Data and Key Indicators Changes - The macroeconomic environment remains weak, with demand continuing to show signs of fatigue and supply also weakening, as indicated by various operational metrics [6][7][39] - CPI has risen for the first time in three months, suggesting potential inflationary pressures, while PPI remains flat, indicating ongoing economic challenges [9][17] Business Line Data and Key Indicators Changes - The automotive sector shows signs of recovery, with July retail sales down only 0.3% year-on-year compared to a 7.4% decline in June, indicating a potential turnaround [6] - The construction sector is expected to benefit from increased government spending and infrastructure projects, with a focus on accelerating the issuance of special bonds [39][40] Market Data and Key Indicators Changes - The real estate market is experiencing a downturn, with significant declines in new and second-hand home sales across major cities [6] - The coal sector is facing mixed signals, with domestic production and demand dynamics influencing price stability [32] Company Strategy and Development Direction and Industry Competition - Companies in the construction sector are advised to focus on stable cash flows and dividend potential, with recommendations for firms like China State Construction and China Railway Construction [40] - The automotive industry is witnessing a shift towards smart and globalized strategies, with leading companies like BYD and Changan expected to capitalize on these trends [20][30] Management's Comments on Operating Environment and Future Outlook - Management expresses concerns over external economic pressures and the need for effective policy measures to stimulate growth, particularly in the context of ongoing geopolitical tensions [7][9] - The outlook for the construction sector is cautiously optimistic, with expectations for improved performance in the second half of the year driven by government initiatives [39][40] Other Important Information - The central bank's monetary policy is expected to remain flexible and supportive, with potential adjustments to interest rates and liquidity measures to bolster economic recovery [15][17] - The agricultural sector is seeing positive developments due to supportive policies for biotechnology and seed industry consolidation, which may enhance growth prospects [34][35] Q&A Session Summary Question: What are the expectations for the automotive sector in the second half of 2024? - The automotive sector is expected to benefit from the effects of the vehicle replacement policy and increasing demand for smart vehicles, with leading companies positioned to capture market share [20][30] Question: How is the construction sector expected to perform in the coming months? - The construction sector is anticipated to see a boost from government spending and infrastructure projects, with a focus on accelerating the issuance of special bonds to support growth [39][40]