"Big Data + AI" is growing strongly, DC HOLDINGS (00861) receives optimistic views from East Money Information Securities.

Recently, East Money Information Securities released a research report, stating that DC HOLDINGS (00861) is focusing on the "big data + AI" strategy, continuously building data analysis and decision-making products and intelligent applications for government and enterprise clients, and commercializing high-quality data and AI application scenarios. The bank predicts that the company's operating income will be 19.299/20.531/22.145 billion yuan respectively in 2024-2026; net profit attributable to shareholders will be 374/571/741 million yuan respectively; corresponding EPS will be 0.22/0.34/0.44 yuan per share respectively; and the corresponding PE will be 13/9/7 times, giving a "hold" rating. The main contents of the research report are as follows: The company released its 2024 interim report. In the first half of 2024, the company achieved total operating income of 7.014 billion yuan, a year-on-year growth of 5%; achieved gross profit of 957 million yuan, with a gross profit margin of 13.65%, a year-on-year decrease of 2.96 percentage points; achieved net profit attributable to shareholders of 11 million yuan, a year-on-year decrease of 73%. The decline in profit was mainly due to the impact of the subsidiary Digital China Information Service Group. Excluding the impact of Digital China Information Service Group, the company achieved operating income of 2.936 billion yuan, a year-on-year increase of 20%; and achieved net profit attributable to shareholders of 41 million yuan, a year-on-year increase of 380%. The growth of "big data + AI" is strong, and the order backlog is sufficient. In the first half of 2024, the company's big data products and solutions achieved revenue of 1.277 billion yuan, a year-on-year growth of 17%, with a compound annual growth rate of 26% for the past four years, and the revenue ratio increased from 9% to 18%; achieved gross profit of 315 million yuan, a year-on-year decrease of 18%, with a compound annual growth rate of 9% for the past four years, and the gross profit ratio increased from 18% to 33%. The decline in gross profit in the first half of the year was due to the downstream market demand decline of the subsidiary Digital China Information Service Group and increased investment in new product lines. Excluding the impact of the subsidiary, the revenue of the company's big data products and solutions increased by 31% year-on-year, and the gross profit increased by 11% year-on-year. In the first half of 2024, the company's outstanding orders for big data business reached 2.424 billion yuan, a year-on-year increase of 15%, providing a guarantee for the long-term stable development of this business. At the same time, the company continues to increase investment in the research and development of "big data + AI" products, seizing market opportunities with AI scenario applications. In the first half of 2024, research and development expenses reached 3.20 billion yuan, leading the industry. Overseas business opens up a second growth curve. In the first half of 2024, the company accelerated its overseas layout, with overseas revenue reaching 4.65 billion yuan, a year-on-year increase of 55%, and the revenue ratio increasing to 7%. Currently, the company's strategic layout in the Guangdong-Hong Kong-Macao Greater Bay Area has been basically completed, and it has entered the overseas market with clients such as Huawei, Honor, ZTE, and BYD Company Limited to build a cross-border one-stop service platform using the "enterprise CSO" model, providing end-to-end solutions for cross-border supply chain for companies going abroad. During the first half of the year, the company successively won bids for the marine meteorological forecasting project of the University of Macau and overseas business orders for BYD Company Limited in Thailand and Vietnam, providing AI-assisted decision-making to empower customers to reduce costs, increase efficiency, and innovate their businesses. With technological advantages and industry accumulation, the company is constantly expanding its market space and is expected to achieve exponential growth in its business.