Key takeaway

The company released its 2025 annual report and 2026 firstquarter report. In 2025, the company recorded operating revenue of RMB13.163bn, up 31.59% YoY; net profit attributable to shareholders of the parent company reached RMB56mn, turning from loss to profit YoY and confirming an earnings inflection point. The earnings growth was mainly driven by explosive growth in government and enterprise business and significant results from overall cost control and efficiency improvement. The company’s profitability recovered significantly, with combined asset impairment and credit impairment losses narrowing by more than RMB330mn YoY. The company firmly advances the “AI for Process” concept and continues upgrading across three directions: modeling-driven approach, process upgrades, and full-domain intelligence. AI is accelerating implementation in multiple financial scenarios such as wealth management, regulatory reporting, and risk management, injecting new momentum for future growth. We initial coverage of the company with a "Buy" rating.

Event

On March 31, the company released its 2025 annual report. In 2025, the company achieved operating revenue of RMB13.163bn, up 31.59% YoY; net profit attributable to the parent company was RMB56.4283mn, turning profitable from - RMB524mn in the same period last year, up 110.77% YoY; and net profit attributable to the parent company after deducting non-recurring gains and losses was RMB11.9773mn, turning profitable from -RMB501mn in the same period last year, up 102.39% YoY.

On April 28, the company released its 2026 first-quarter report. In 1Q26, the company achieved operating revenue of RMB1.765bn, down 18.27% YoY; net profit attributable to the parent company was -RMB92mn, with losses narrowing by 0.50% YoY; and net profit attributable to the parent company after deducting non-recurring gains and losses was -RMB98mn, with losses narrowing by 1.91% YoY.

Quick take

The earnings inflection point has emerged, and cost control and efficiency improvement have delivered remarkable results. In 2025, the company delivered strong earnings, achieving operating revenue of RMB13.163bn, up 31.59% YoY, and net profit attributable to the parent company of RMB56mn, successfully turning profitable. In 4Q25, the company achieved net profit attributable to the parent company of RMB163mn, confirming an operating inflection point. The company’s profitability recovered significantly, mainly due to strengthened internal management and notable results from quality and efficiency improvements. In 1Q26, the company continued to narrow its losses. During the 2025 annual reporting period, the company’s asset impairment losses and credit impairment losses combined narrowed significantly by over RMB330mn YoY. Among them, goodwill impairment losses were RMB114mn, down sharply from the same period last year, while credit impairment losses narrowed by over RMB66mn YoY. At the same time, the company effectively controlled expenses. Against the backdrop of substantial revenue growth, selling expenses were broadly flat YoY, while R&D expenses declined 10.00% YoY. Net operating cash flow was -RMB39mn, mainly due to an increase in restricted funds resulting from litigation during the reporting period. In 1Q26, the company continued to narrow its losses.

By segment: Government and enterprise business grew strongly, while financial business developed steadily. In 2025, the company’s government and enterprise business seized opportunities in the intelligent computing market brought by AI development and achieved explosive growth, with revenue reaching RMB7.172bn, up 100.81% YoY. It became the core driver of the company’s revenue growth, mainly because the company provided intelligent computing infrastructure construction services for enterprise customers, contributing significant incremental revenue. Due to changes in the business mix, the gross margin of this business edged down to 10.37%, but its rapid scale expansion laid a solid foundation for the company’s overall turnaround to profitability. In the financial business, the company proactively adjusted its operating strategy and focused on high-quality development, with revenue from the financial sector reaching RMB4.526bn. The core financial software services business remained stable, with contract value reaching RMB3.919bn and revenue reaching RMB3.6bn. The company continued to deepen its major-client strategy, with revenue from large stateowned banks and joint-stock banks increasing 20.57% YoY, and its customer structure continued to optimize. According to a CCID Consulting report, the company has ranked first in the market for banking core business systems and channel management systems for 13 consecutive years, while its overall market share ranked first among listed companies in China, reinforcing its solid industry leadership. In addition, the operator business achieved revenue of RMB1.445bn, maintaining steady development momentum.

Focusing on the integrated innovation of “AI + finance”, the concept of “AI for Process” is accelerating implementation. The company firmly pursues the “AI First” strategy and took the lead in proposing and implementing the “AI for Process” concept, promoting deep integration between AI and financial business processes. The company’s R&D continues to upgrade around the three major directions of “model-driven development, process upgrading, and full-domain intelligence”, forming four core segments: the financial knowledge middle platform, AI for SE (financial software engineering), AI+ solutions, and a matrix of intelligent agents for financial scenarios. In 2025, the company used AI to empower a product matrix of more than 10 products and more than 20 solutions . In “AI + software engineering,” the company is fully advancing the deployment of “AI Coding” technology across multiple solution projects such as core systems and general ledger, effectively improving delivery efficiency. In terms of scenario-based applications, the company took the lead in deploying an intelligent agent application in the wealth management field at a joint-stock bank; in the regulatory reporting field, the “human-machine collaboration” project with Mitsubishi Bank has become a typical case; in corporate marketing, the “corporate finance marketing assistant” has been deployed at a city commercial bank in East China. The company aims to become a leading “financial agent factory” and plans to establish an RMB100mn-level AI special development fund in 2026 to continuously consolidate its technological leadership.

Investment recommendation: In 2025, the company successfully turned losses into profits by focusing on high-quality orders and strengthening expense control, establishing a clear performance inflection point. Profit in Q4 alone reached RMB163mn, showing a clear improvement trend. Looking ahead, the company’s growth drivers are clear. On one hand, its government and enterprise business is capturing opportunities in the AI computing power market and is expected to continue contributing to growth. On the other hand, the company firmly implements the “AI First” strategy, deeply integrating AI into financial IT solutions, which is expected to enhance product value and market share amid the wave of banking intelligent upgrades. The company has maintained the No.1 market position for many consecutive years in areas such as bank core systems and channel management, with a solid leading position. Revenue for 2026–2028 is expected to reach RMB13.645bn / RMB14.302bn / RMB15.08bn, while net profit attributable to shareholders of the parent company is projected at RMB115mn / RMB197mn / RMB335mn, corresponding to PE of 125.16 / 72.70 / 42.86x. Among them, software development and technical services are expected to generate revenue of RMB7.667bn / RMB8.204bn / RMB8.860bn, while system integration is expected to generate revenue of RMB5.974bn / RMB6.093bn / RMB6.215bn. Initiate coverage with a "Buy" rating.

Risks

(1) Risk of intensified industry competition: Affected by the continued low net interest margin in the banking sector, cost reduction and efficiency improvement have become the mainstream operational focus of banks. The fintech industry remains relatively fragmented, and competition among vendors is becoming increasingly intense.

(2) Risk that products and technologies fall short of expectations: The digital and intelligent transformation of the financial sector continues to accelerate, coupled with the rapid development of artificial intelligence technology, placing more stringent requirements on the intelligence level and technological advancement of fintech products. If the company fails to keep pace with technological iteration, the market competitivene ss of its technologies and products may decline.

(3) Team and talent attrition risk: The company's sustained development highly depends on the stable retention and quality recruitment of core technical personnel and key management staff. At present, compe tition for outstanding talent in the information technology field has become increasingly intense, making it more difficult to attract and retain top talent.

(4) Sensitivity analysis: If the company’s software development and technical services business underperforms expectations in 2026 and declines by 50%, the company’s overall revenue would fall by 28.09%; if the system integration business underperforms expectations and declines by 50%, the company’s overall revenue would fall by 21.89%; if other businesses underperform expectations and decline by 50%, the company’s overall revenue would fall by 0.02%.