After adjustment, net profit surged by 500% and stock prices hit an 8-month high. Is the turning point for EDIANYUN (02416) here?

Financial report intensive disclosure period, performance forecasts of various listed companies have become the focus of investors' attention. Recently, an office IT comprehensive solution provider, EDIANYUN (02416), saw its stock price open high and rise after announcing a profit exceeding expectations. On the 19th, the stock price rose more than 30% in a single day, reaching a new high of 3.05 Hong Kong dollars, nearly double compared to a month ago. According to the performance forecast, the company expects its adjusted net profit for the fiscal year 2024 to be between 75 million and 85 million RMB, an increase of 493%-558.7% compared to the fiscal year 2023; revenue is expected to be between 1.35 billion and 1.4 billion RMB, a year-on-year increase of 6.2%-10.2%. For a long time, the capital market did not pay much attention to EDIANYUN. In August 2024, the company was removed from the Hang Seng Composite SmallCap Index due to its continuously declining stock price, and in September it was removed from the Hong Kong stock connect. Since October of last year, EDIANYUN has been actively repurchasing its shares, having repurchased at least 1.8 million shares in January alone. With the recent optimistic performance, does it mean that the fundamentals of EDIANYUN are showing signs of improvement? Big improvements in profit indicators, relying more on a single business Recently, after turning a year-on-year net loss into a profit in the interim report, EDIANYUN once again surprised the market with its performance. According to the latest disclosure, EDIANYUN is expected to record revenue of approximately RMB 1.35 billion to 1.4 billion for the fiscal year 2024, a year-on-year increase of about 6.2% to 10.2%; adjusted net profit is expected to be between 75 million and 85 million, a year-on-year increase of about 493.0% to 558.7%. Key operational data have all seen growth, and business development remains strong. The company expects to have 51,024 subscribing customers by the end of the fiscal year 2024, a year-on-year increase of about 9.1%; the number of service devices is 1.3742 million, a year-on-year increase of about 14.1%; and the net increase in service devices is 169,300, a year-on-year increase of about 189.4%. The company believes that the significant improvement in performance for the fiscal year 2024 is mainly due to the following factors: revenue growth, in a complex macro environment, the company still achieved a significant improvement in sales efficiency, launched the well-received self-developed PC product AI01 series, and strengthened the company's competitiveness as an industry leader; a decrease in sales expense ratio, mainly due to systematic optimization of the sales team's efficiency and effective implementation of refined sales strategies, significantly improving the marketing resource input-output ratio; and a decrease in financial expense ratio, due to the company's improved market position and continuous optimization of asset quality leading to a reduction in financing costs. EDIANYUN was established in 2014 and is one of China's major providers of comprehensive office IT solutions. Since its establishment, the company has been providing innovative one-stop, reliable, and flexible office IT hosting services, subscription-based, to small and medium-sized enterprises, including no guaran...Ranked first on the free list of the Chinese app store, surpassing ChatGPT, Google Gemini, Microsoft Copilot, and other American tech companies' generative AI products in the United States as well.Compared to ChatGPT developed by Open AI, DeepSeek not only matches its performance but also compresses the cost of reasoning models to a very low level. According to technical reports, the pricing of R1 developer services is 1-4 yuan per million tokens (input strings), which is only about 1/30 of OpenAI o1. DeepSeek provides an AI technology solution for enterprises with low threshold and high efficiency. While promoting the further application of large model technology, it also brings the demand for localized deployment of related computing power infrastructure. Guotai Junan Securities pointed out that the deployment of large models will increase the demand for enterprise IT equipment upgrades, benefiting hardware areas such as servers, power supplies, UPS, and transformers that are driven by the investment in smart computing centers. As a comprehensive office IT solution provider, EDIANYUN also does not want to miss the opportunity of the AI wave and has made early layouts in the AI field. In February 2024, EDIANYUN launched the AI large model aggregation platform EZH, which allows enterprises to easily, at low cost, and quickly obtain GPT usage rights through an exclusive national strategic cooperation with Xinnuo Times. In June, the company launched the world's first industrial-grade large model re-manufacturing Siasun Robot&Automation production line application Defect GPT. It can replace manual labor with industrial large models to operate Siasun Robot&Automation, achieving full-automatic detection of 81 re-manufacturing processes, effectively improving detection efficiency and capacity. At the beginning of 2025, EDIANYUN announced that it will soon launch its self-developed top-of-the-line AIPC, which will be equipped with three high-end desktop CPUs, i5-14400F, i7-14700F, and i9-14900KF, and three high-end graphics cards, RTX3050, RTX4060, and RTX5080, to provide strong hardware performance support for DeepSeek's local deployment. At the same time, EDIANYUN also promised to provide services for enterprises to deploy DeepSeek locally, truly achieving plug-and-play for enterprises. For small and medium-sized enterprises with a tight budget and a demand for using DeepSeek but unable to afford an AI PC, EDIANYUN's self-developed AI PC will provide a cost-effective solution, and the company's strong customer base of small and medium-sized enterprises will also become a good soil for exploring AI applications. With the continued popularity of DeepSeek, the AI business is expected to become a new growth curve for EDIANYUN. With the significant improvement in performance combined with the highlights in AI, many investment institutions have optimistic expectations for EDIANYUN, such as Dongxing giving the company a "recommended" rating, stating that the company's core barriers are continuously being solidified, and with the increase in industry penetration rate, the company is expected to benefit in the future. However, due to the limitations of business scale and considering that the AI business is still in its early stages, at the current valuation level, the company is not much different from similar enterprises, and the stock price may lack the momentum to continue rising in the future. As the macro economy gradually recovers, EDIANYUN deserves continuous attention from the market.