Core Insights - The recent QECon 2025 Global Software Quality & Efficiency Conference in Shanghai highlighted the technological innovation capabilities of the company in the AI testing field [1] - The company has positioned its AI business as a strategic catalyst for growth since 2023, focusing on emerging areas such as intelligent driving, brain-machine interfaces, and generative AI [1] - The company’s subsidiary, RockAI, has developed the Yan architecture model, which is the first domestic model not based on Transformer or Attention mechanisms, showcasing advancements in AI technology [2] Company Developments - The company has made significant progress in the intersection of artificial intelligence and brain science, particularly with the development of a brain-computer interface model that achieves high-precision Chinese language decoding [1] - The company’s innovations were recognized by local government officials, who emphasized the importance of supporting enterprises in the AI sector to enhance their contributions to the economy [2] - The company aims to strengthen core technology development and promote the integration of AI with the real economy, contributing to Shanghai's goal of becoming a global digital hub [3]

Core Viewpoint - In the first half of 2025, while many self-developed model companies in the A-share market faced losses, Yanshan Technology reported a profit of 67.11 million yuan, a year-on-year increase of 81.51%, despite a revenue decline of 6.38% to 317 million yuan, raising questions about the sustainability of its high market valuation of 50 billion yuan [1][2]. Revenue and Profit Analysis - Yanshan Technology's revenue for the first half of 2025 was 317 million yuan, down 6.38% year-on-year, while net profit was 67.11 million yuan, up 81.51% year-on-year [2]. - The company's revenue heavily relies on traditional internet value-added services, with 94.58% coming from this segment, while AI-related business revenue plummeted by 72.3% to 9.52 million yuan, resulting in a negative gross margin of -12.95% [2][10]. - The overall gross margin for the company was 27.43%, a decline of nearly 20 percentage points compared to the same period last year [2]. AI Business Performance - Yanshan Technology's AI initiatives, including smart driving and brain-computer interface projects, have not generated significant revenue and are described as "loss-making black holes" [2]. - The subsidiary Nullmax reported a revenue of 9.52 million yuan and a loss of 86.99 million yuan in the first half of 2025, compared to 34.38 million yuan in revenue and 27.96 million yuan in losses in the same period last year [3][4]. - The Yan architecture model, launched by Yanshan Technology, is still in its early stages, with revenue of 2.426 million yuan and a loss of 40.95 million yuan reported in 2024 [5]. Investment Gains - The significant increase in net profit is attributed to investment gains, specifically from stock trading, which contributed 120 million yuan in fair value changes, a turnaround from a loss of 4.7 million yuan in the previous year [6][7]. - The primary source of this investment gain was the substantial increase in the stock price of Innovation Medical, which rose 79% from 7.96 yuan to 14.25 yuan per share, generating over 100 million yuan in "floating profit" for the company [7]. Financial Structure and Market Valuation - As of mid-2025, Yanshan Technology's total assets reached 10.587 billion yuan, with trading financial assets exceeding 5.676 billion yuan, accounting for over 50% of total assets [10]. - Despite a strong cash position, the company has not issued dividends in 2024 or mid-2025, contrasting with many other A-share companies [10]. - Yanshan Technology's R&D expenditure of 170 million yuan is significantly lower than its peers, with companies like iFlytek spending 2.07 billion yuan, indicating a potential mismatch between its high market valuation and R&D investment [11][12]. Market Perception and Future Outlook - The high market valuation of Yanshan Technology is perceived as a result of its "AI concept" rather than solid fundamentals, raising concerns about the sustainability of its valuation if it cannot achieve breakthroughs in AI business [12]. - Analysts suggest that the reliance on investment income for profitability poses risks, as market fluctuations could lead to significant declines in both performance and valuation [12].

Group 1: Brain-Computer Interface (BCI) Business - The company's BCI team consists of approximately 40 members, successfully implementing non-invasive BCI technology in the game "Black Myth: Wukong" using Steady State Visually Evoked Potential (SSVEP) principles [2] - The BCI system demonstrates advanced neural decoding capabilities, allowing precise control without traditional peripherals, achieving performance that matches or exceeds invasive interfaces [2] - Future applications of this technology include aerospace, smart home, medical rehabilitation, and gaming industries [2][3] Group 2: AIGC Team and Revenue Generation - The AIGC subsidiary, consisting of over 70 members, has begun generating revenue by providing localized applications and deployments to enterprise clients in 2024 [4] - The self-developed Yan architecture model, which is the first domestic model not based on Transformer or Attention mechanisms, offers competitive advantages in privacy, security, low latency, reliability, and cost [4] - Specific applications of the Yan model include industrial inspections, smart factories, public security patrols, traffic monitoring, and various consumer devices [4] Group 3: Internet Business Performance - The internet business revenue for 2024 is projected to grow by 15.33% compared to 2023, driven by increased user engagement with tools like 2345 Weather Forecast and new business developments [5] - The gross profit for the internet business in 2024 is estimated at 198.46 million yuan, with a decline in gross margin attributed to increased promotional expenses [5] - Positive growth trends are observed in paid tools for both PC and mobile platforms, indicating potential for further market expansion [5] Group 4: Smart Driving Business - The smart driving business is expected to achieve over 70 million yuan in revenue for 2024, with key clients including major domestic automotive manufacturers such as SAIC, Chery, and Jiangling Ford [6] - The company holds a 28.31% stake in Nullmax (Cayman) and plans to enhance control through capital increases and acquisitions [6] Group 5: Future Plans and Capital Operations - Currently, the company has no plans for mergers or capital operations but will adhere to legal and regulatory requirements if such activities arise in the future [6]

Core Viewpoint - The company, Yanshan Technology, reported a revenue of 662 million yuan for 2024, marking a year-on-year growth of 17.06%, with a net profit attributable to shareholders of 32.46 million yuan. The company is focusing on internationalization and intelligence, particularly in the fields of mobile internet and artificial intelligence [1]. Group 1: Financial Performance - In 2024, the company achieved an operating income of 662 million yuan, reflecting a 17.06% increase year-on-year [1]. - The net profit attributable to shareholders was 32.46 million yuan [1]. - The internet information service business generated 559 million yuan in revenue, a 15.33% increase from 2023, accounting for 84.54% of total revenue [1]. Group 2: Strategic Focus - The company aims to innovate and collaborate in cutting-edge fields such as mobile internet and artificial intelligence, with a mission to create a smarter and more convenient future [1]. - Yanshan Technology has made significant progress in artificial intelligence, with advancements in various business segments [1]. Group 3: Artificial Intelligence Developments - The company has made breakthroughs in smart driving, including acquiring a controlling stake in Nullmax (Cayman) Limited, which specializes in automotive intelligent driving systems [1]. - Nullmax introduced a new generation of autonomous driving technology, Nullmax Intelligence (NI), which supports multi-modal inputs for enhanced task reasoning [2]. - The Shanghai Yansi Brain Research Institute achieved notable results in brain-computer interface technology, successfully controlling a game using non-invasive methods [3]. Group 4: Generative AI Initiatives - Yanshan Technology established RockAI, which developed the Yan architecture model, the first domestic model without a Transformer or Attention mechanism, and received regulatory approval [4]. - RockAI has provided localized applications for enterprise clients and is exploring collaborations with various device manufacturers [4]. - The generative AI system for smart medical records based on the Yan architecture has been implemented in hospitals [4].