Guotai Haitong: Initiate "buy" rating on UNISOUND (09678) with a target price of HKD 451.33.

Guotai Haitong has released a research report stating that they are initiating coverage on UNISOUND (09678) for the first time and giving it a "hold" rating. As a seasoned AI voice company, UNISOUND has vast prospects for AI applications. It is expected that the company's operating income for the years 2025-2027 will be 12.68/19.43/26.59 billion RMB, with year-on-year growth of 35%/53%/37%; and the net profit attributable to shareholders will be -2.45/-1.35/-1.04 billion RMB, with year-on-year growth of 46%/45%/23%. According to two valuation methods, taking a conservative approach and giving a target price of HK$451.33. Main viewpoints by Guotai Haitong: Pioneer in the industrialization of AGI technology in China Established in 2012, UNISOUND established the Atlas artificial intelligence infrastructure in 2016 and developed a proprietary large model with 600 billion parameters, known as the Shanhai Large Model, which was officially released in 2023. The products and solutions launched by the company cover a wide range of AI application scenarios in smart living and smart healthcare. The company's equity structure includes Cloud Thought Shangyi holding 24.0815%, Cloud Creation Interactive holding 3.8032%, with Dr. Huang being the controlling shareholder of both companies; Dr. Liang holding 3.7790% of the shares, and Dr. Kang holding 2.2674%. The company has 454 employees (as of the first half of 25), with research and development personnel accounting for 68.7%. Shanhai Large Model empowers rapid implementation of life and medical AI businesses In 2024, the company achieved revenue of 9.39 billion RMB, with a year-on-year growth of 29.1%. The company's revenue consists mainly of daily living and medical business. In 2024 and the first half of 25, the revenue from daily living business increased by 27.8% and 20.2% respectively year-on-year; the revenue from medical business increased by 34.4% and 22.28% year-on-year respectively. The 600 billion-parameter Shanhai Large Model provides AI empowerment for daily living and medical businesses. Daily living solution business includes AI solutions for scenarios such as transportation, commercial spaces, hotels, and residences, with 313 solution customers in 2024 and 121 system integrators/agents. Product business includes AI large language model capabilities output and AI model embedded chips and IoT hardware modules. In 2024, the company sold 36 million AI chips to developers and customers. The company's AI medical business scenarios include medical record voice input, medical record quality control, single disease quality control, and medical insurance payment management. AI solutions and medical market are growing rapidly. According to Frost & Sullivan, the AI solution market in China was 180.4 billion RMB in 2024, with a compound annual growth rate of 33.7% over five years, and it is expected to reach 1,174.9 billion RMB by 2030, with a compound annual growth rate of 36.7%. In 2024, the company ranked fourth in the AI solution market in China. It ranked third in the daily living AI solution market and fourth in the medical AI market. Risk warning: AI applications not meeting expectations; profit improvement not meeting expectations; cash flow risks.