Core Viewpoint - The company is issuing convertible bonds to unspecified investors, which may dilute immediate returns, and has proposed specific measures to mitigate this dilution risk [1][2][4] Financial Impact Analysis - The company has analyzed the impact of the convertible bond issuance on key financial metrics under different scenarios, including a 10%, 20%, and 30% growth in net profit for 2026 compared to 2025 [2][4] - The projected net profit for the parent company, excluding non-recurring gains and losses, is estimated at RMB 137.71 million for 2025 [2][4] - The total share capital is expected to increase from 27,139.28 million shares to 28,593.62 million shares if all bonds are converted [4] Measures to Mitigate Dilution - The company has committed to using the raised funds effectively and has established a management system to ensure compliance with regulations regarding the use of raised funds [20][21] - The company plans to enhance its operational efficiency and profitability to counteract the dilution effect on immediate returns [20][21] Project Necessity and Feasibility - The funds raised will be used for projects that are expected to enhance the company's market competitiveness and create new profit growth points [6][20] - The company focuses on industrial software and smart manufacturing solutions, aiming to support digital transformation for enterprises [6][8] Technical and Market Preparedness - The company has a strong talent pool with 1,674 R&D personnel, accounting for 33.72% of its workforce, ensuring adequate technical support for project implementation [9] - The company has established a solid market presence with a diverse client base across various industries, which will help in the successful adoption of new solutions [14][16]

Investment Rating - The report maintains an "Outperform" rating for the company [1] Core Views - The company is currently in a transformation phase, facing overall pressure, but AI empowerment is expected to drive future growth [1] - The company's revenue for 2024 is reported at 9.153 billion yuan, a decrease of 6.6% year-on-year, with a net loss of 2.061 billion yuan, which is an increase in loss compared to the previous year [6] - The decline in revenue is attributed to delayed customer demand and the impact of transitioning to a subscription business model [6] - The company’s cloud service revenue for 2024 is 6.85 billion yuan, a decrease of 3.4% year-on-year, while subscription revenue has grown by 26% [6] - The company has launched an enterprise service model, YonGPT2.0, focusing on AI and agent technologies, which are seen as strategic priorities for future growth [6] - The long-term growth potential is supported by the successful advancement of cloud business and AI initiatives, despite short-term challenges [6] Financial Data and Profit Forecast - Total revenue projections for 2025-2027 are 10.505 billion, 12.187 billion, and 14.181 billion yuan respectively, with expected growth rates of 14.8%, 16.0%, and 16.4% [5] - The forecasted net profit for 2025 is 101 million yuan, with significant improvements expected in subsequent years, reaching 410 million yuan in 2026 and 838 million yuan in 2027 [5] - The company’s gross margin is projected to stabilize around 49.4% in 2025, improving to 51.6% by 2027 [5] - The return on equity (ROE) is expected to turn positive by 2025, reaching 1.2% and improving to 8.7% by 2027 [5]