CICC: Knowledge Atlas (02513) outperforms industry ratings, target price at 688 Hong Kong dollars.

CICC released a research report stating that they are optimistic about KNOWLEDGE ATLAS (02513) base model's iterative capabilities and the realization of Coding scenarios, comparing the company with leading overseas large model companies in terms of valuation. They have given the company an outperform industry rating and a target price of HKD 688 (40 times P/S in 2028, discounted rate of 7%). The company is currently trading at 25 times P/S in 2028, indicating a 42% upside potential from the current stock price. They have initiated coverage with an outperform industry rating and a target price of HKD 688.00, based on the forward P/S valuation method, corresponding to a multiple of 40 times P/S in 2028, with a discount rate of 7%. The company is a leading Chinese and world-class large model manufacturer. Key points by CICC are as follows: - Originating from technological achievements of Tsinghua University, technological foundation and model capabilities are the cornerstone of the company. - Established in 2019, the company focuses on the deep cultivation of GLM series base models, refining core capabilities such as Coding, reasoning, and Agentic models. The latest generation base model GLM-5 has reached the SOTA level in several benchmark evaluations such as HLE, SWE, and has received wide acclaim from domestic and foreign users. - Commercialization of model value realization, empowering thousands of industries. - The company relies on the MaaS platform to output model capabilities, with revenue CAGR expected to reach 130%+ from 2023 to 2027. API revenue will become the main growth engine. The company estimates that by early 2026, API-related ARR will be close to 600 million yuan, several times higher than the same period last year. At the same time, the company covers various industries such as internet, software, and chips, focusing on unlocking model value to empower customers to improve productivity. AI Coding TAM may reach trillions of yuan, KNOWLEDGE ATLAS has a leading advantage. - AI Coding, as the fastest scenario for AI landing, is still in the early stages of penetration. According to the company's estimate, TAM will reach trillions of yuan in scale. KNOWLEDGE ATLAS focuses on refining the Coding scenario, with core advantages such as low latency, high stability, powerful reasoning and tool usage capabilities, and is expected to continue leading in the Coding scenario and expand to more enterprise scenarios. CICC is optimistic about KNOWLEDGE ATLAS's base model capabilities and its continuous leadership in the AI Coding scenario, expecting to cover more domestic and foreign customers. It is estimated that KNOWLEDGE ATLAS will generate revenues of 720 million / 1.75 billion / 3.67 billion / 7.67 billion yuan from 2025 to 2028, with a CAGR of 120%. Potential catalysts: release of new generation models; high growth of API and Coding ARR. Risks: slower than expected R&D progress; slower than expected commercial expansion; intellectual property-related risks; funding shortage risks; intensified competition risks; data security risks.