SHGBIT(603918)2025-06-03 07:55Investment Rating - The report assigns an "Accumulate" rating to the company with a target price of 21.59 CNY per share, based on a current price of 17.34 CNY [1]. Core Views - The company is positioned as a leader in the domestic digital technology sector, with a forward-looking layout in the legal financial technology segment. The rebound in core business, efficiency improvements from AI mediation, and the rapid expansion of diversified dispute resolution services are expected to drive future performance beyond expectations [2]. Financial Summary - Revenue projections for 2025-2027 are 9.41 billion CNY, 11.53 billion CNY, and 13.77 billion CNY, respectively, with corresponding net profits of 0.26 billion CNY, 0.99 billion CNY, and 1.69 billion CNY [3][20]. - The company anticipates a revenue growth rate of 34.6% in 2025, followed by 22.5% in 2026 and 19.4% in 2027 [3]. - The net profit margin is expected to improve significantly, with a projected return on equity (ROE) of 14.1% by 2027 [3]. Business Segments - The company has three main business segments: Smart Scene Solutions, Smart Building Solutions, and Big Data & Cloud Platform Services. The Smart Scene Solutions segment is expected to contribute significantly to revenue, while the Big Data & Cloud Platform Services is projected to maintain a high growth rate [12][34]. - The diversified dispute resolution platform launched in 2022 has seen rapid growth, with revenue from mediation services expected to exceed 45 million CNY in 2024, reflecting a year-on-year increase of over 220% [12][34]. Strategic Initiatives - The company is actively involved in the construction of digital courts in collaboration with various judicial bodies, leveraging AI technologies to enhance judicial processes [12][34]. - A strategic partnership with Alibaba Cloud has been established to create an AI innovation base for the judicial industry, focusing on developing AI-driven solutions [12][34]. Valuation Analysis - The report employs both PE and PS valuation methods, concluding a reasonable valuation of 79.20 billion CNY, corresponding to a target price of 21.59 CNY per share [18][22][23]. - The company is expected to achieve a PE ratio of 80 times by 2026, reflecting its growth potential and market position [20][22]. Market Position - The company has a diversified shareholder structure, with significant ownership by the management team and strategic investors, which enhances its governance and operational stability [44][48]. - The company has been in operation for over 30 years, focusing on integrating technology solutions across various sectors, including government, education, and finance [25][30]. Recent Performance - The company faced challenges in 2024, with a revenue decline of 24.98% due to macroeconomic factors, but showed signs of recovery in Q1 2025 with a revenue increase of 63.93% [32][34]. - The gross profit margin for 2024 was reported at 26.73%, indicating a decline but still competitive within the industry [36]. Future Outlook - The company is expected to continue expanding its service offerings and market reach, particularly in the legal financial technology sector, which is anticipated to drive future revenue growth [12][34]. - The strategic focus on AI and digital transformation is expected to enhance operational efficiency and profitability in the coming years [12][34].