Core Insights - The company has achieved significant improvement in profit quality through strict project quality control, with a revenue of 15.2 billion yuan in the first half of the year, a year-on-year increase of 2%, and a net profit attributable to shareholders of 2.5 billion yuan, a year-on-year increase of 37% [1] - The company has benefited from favorable downstream demand, with all three major business segments experiencing growth [2] - The company is advancing the development of large models and promoting the implementation of related technologies across various industries [3] Group 1: Financial Performance - The company strictly implements project screening mechanisms and cost control, leading to a gross profit margin recovery to 42.7% in Q2, an increase of 1.8 percentage points year-on-year and 2.5 percentage points quarter-on-quarter [1] - The net cash flow from operating activities reached 639 million yuan in the first half of the year, the highest for the same period since the company went public [1] - The cash collection ratio for the first half of the year was 115%, supported by the orderly advancement of national debt reduction policies and strict control over project payment quality [1] Group 2: Business Growth - Domestic business revenue increased by 2% year-on-year to 7.553 billion yuan, with government business revenue growing by 5% to 1.85 billion yuan, and Q2 growth accelerating to 8% [2] - Overseas business revenue also grew by 2% year-on-year to 7.628 billion yuan, with expectations for continued steady growth in the second half of the year [2] - Innovative business revenue surged by 23% year-on-year to 3.023 billion yuan, with notable growth in automotive electronics, thermal imaging, firefighting, and machine vision sectors [2] Group 3: Technological Advancements - The company is deeply engaged in the research and development of large models, focusing on multi-dimensional perception, data communication, and data-visual integration technologies [3] - New products such as the integrated large model machine and various full-stack large model series products have been launched, aimed at providing tailored industry intelligent assistants [3] - Earnings per share are projected to be 1.22, 1.31, and 1.48 yuan for 2025-2027, with a target price of 27.51 yuan based on a 21 times PE valuation for comparable companies in 2026 [3]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of 27.51 CNY based on a projected average PE of 21 times for comparable companies in 2026 [4][7]. Core Views - The company is experiencing comprehensive growth across its three main business segments and is advancing its research in large model development, which is expected to enhance its market position [2][11]. - The company’s revenue for 2023 is projected at 32.218 billion CNY, with a year-on-year growth of 5%. The net profit attributable to the parent company is expected to reach 7.362 billion CNY, reflecting a significant increase of 217% compared to the previous year [6][11]. Financial Forecasts and Investment Recommendations - Earnings per share (EPS) are forecasted to be 1.22 CNY, 1.31 CNY, and 1.48 CNY for the years 2025, 2026, and 2027 respectively. This is a revision from earlier estimates of 1.31 CNY and 1.50 CNY for 2025 and 2026 [4][12]. - The company’s revenue is expected to grow to 40.691 billion CNY by 2027, with a compound annual growth rate (CAGR) of approximately 9% from 2025 to 2027 [6][12]. Business Performance - The company’s domestic business revenue grew by 2% year-on-year to 75.53 billion CNY in the first half of the year, with government business revenue increasing by 5% to 18.5 billion CNY [11]. - The overseas business revenue also saw a 2% increase to 76.28 billion CNY, with expectations for continued steady growth in the second half of the year [11]. - The innovative business segment reported a 23% increase in revenue to 30.23 billion CNY, driven by advancements in automotive electronics, thermal imaging, firefighting, and machine vision [11]. Market Position and Competitive Advantage - The company is focusing on high-value projects and strict cost control, which has led to a significant improvement in profit quality, with a gross margin recovery to 42.7% in Q2 [11]. - The establishment of six regional supply centers and multiple national warehouses enhances the company’s competitive edge in localized rapid supply [11].

Investment Rating - The investment rating for the company is "Accumulate" (maintained) [2] Core Views - The company is focusing on building a full-stack capability for large models to promote the industrialization of AI, with significant R&D investments and product launches across various sectors [8] - The company has established deeper strategic partnerships with major players like China Mobile, expanding collaboration into new product categories and areas [8] - Revenue and profit forecasts for 2025-2027 are optimistic, with expected revenues of 346.37 billion, 374.79 billion, and 407.38 billion yuan, and net profits of 39.99 billion, 43.19 billion, and 48.06 billion yuan respectively [8] Financial Performance Summary - The company reported a revenue of 32,218 million yuan in 2023, with a projected growth rate of 5.4% [7] - The net profit for 2023 was 7,362 million yuan, with a significant increase of 216.7% compared to the previous year [7] - The earnings per share (EPS) for 2023 was 2.31 yuan, with a projected EPS of 1.22 yuan for 2025 [7] Product Development and Market Strategy - The company has launched a series of large model products across edge, cloud, and central sides, with 121 products released in the first half of 2025 [8] - The focus areas include education, power, cultural tourism, transportation, public safety, and smart cities, enhancing the company's core competitiveness in the smart IoT industry [8] - Continuous upgrades to the Starry Sky large model have been made, with the 2.0 version released in March 2025, featuring capabilities in language, multi-modal, and vision [8]