Core Viewpoint - Visual China is accelerating its AI strategy by introducing investment from the Longgang Fund to enhance its AI-related business, particularly through its subsidiary Shenzhen Elephant, amid challenges in traditional image business due to rapid AIGC development [1][2][3] Group 1: Investment and Strategic Moves - Visual China plans to raise 100 million yuan for Shenzhen Elephant, with 10 million yuan added to registered capital and 90 million yuan to capital reserves [2] - The Longgang Fund, a state-owned entity, will hold 9.09% of Shenzhen Elephant, which focuses on AI technology development and applications [2][3] - The investment aims to integrate resources and foster collaboration in AI technology, enhancing the company's strategic development in "AI intelligence + content data + application scenarios" [2][4] Group 2: Financial Performance - In 2024, Visual China reported revenue of 811.2 million yuan, a growth of 3.89%, significantly down from 11.94% the previous year [6] - The company experienced a net profit decline of 18.17%, with a non-GAAP net profit growth of only 3.8%, compared to 12.22% in the prior year [6] - Revenue in 2024 is down 17.9% compared to the peak in 2018, and non-GAAP net profit has decreased by 66% since then [6] Group 3: Business Transformation and AI Integration - Visual China is transitioning from a cultural media company to a cultural technology enterprise, focusing on content and technology [3] - The company has made several acquisitions to expand its content ecosystem, including a 31.6% stake in the audio-visual material trading platform Guangchang Creative [3] - AI-related revenue from new business initiatives is currently only 2.22% of total revenue, despite significant investments in AI technology [7][8] Group 4: Operational Challenges - The company's overall gross margin has been declining, with a drop from 63.52% in 2020 to 46.81% in 2024 [6][8] - The main business, which accounts for over 99% of revenue, includes content licensing, customization, and AI-enabled applications, but has faced rising operational costs [6][8] - The gross margin for the main business decreased by 8.71% in 2024, indicating a significant reduction in profitability [8]