Sealand Securities Co.,Ltd. has upgraded INSPUR DIGI ENT (00596) to a "Buy" rating, projecting revenues of 90.76/100.22/109.96 billion yuan for 2025-2027 respectively, with net profits attributable to shareholders of 5.41/6.53/8.93 billion yuan and EPS of 0.47/0.57/0.77 yuan per share. At current share prices, the corresponding P/E ratios for 2025-2027 are 18.21/15.08/11.02 times respectively. The company's cloud services transformation continues to advance, driving overall revenue and profitability improvements. In H1 2025, the company achieved operating revenue of 43.43 billion yuan, up 4.88% year-on-year; net profit attributable to shareholders reached 1.83 billion yuan, up 73.26% year-on-year; basic earnings per share reached 0.16 yuan.

**Cloud Services Business Turns Profitable, Driving Overall H1 Profit Growth**

The company's gross profit margin and profits improved significantly year-on-year in H1 2025, primarily driven by the cloud services business:

Revenue: In H1 2025, cloud services/management software/IoT solutions generated revenues of 12.74/11.98/18.72 billion yuan respectively, with year-on-year changes of +29.96%/-0.34%/-4.46%. Benefiting from rapid growth in cloud services revenue, the company's gross profit margin reached 23.37% in H1 2025, up 1.35 percentage points year-on-year.

Profit: In H1 2025, the cloud services business achieved operating profit of 0.20 billion yuan, compared to a loss of 0.71 billion yuan in the same period last year; management software business operating profit reached 1.85 billion yuan, up 6.22% year-on-year; IoT business operating profit was 0.18 billion yuan, down 12.12% year-on-year.

Expenses: In H1, the company's sales, administrative, and R&D expense ratios were 5.92%, 13.74%, and 9.15% respectively, with year-on-year changes of +0.01/-0.25/-1.37 percentage points.

**Release of Haiyue Large Model V3.0 Enhances Cloud Services Intelligence and Market Expansion**

The cloud services business centers on the Haiyue large model, Haiyue PaaS platform, and intelligent ERP, targeting large, medium, and small enterprises across key enterprise scenarios.

Large Enterprise Market: Penetrating central SOEs and leading state-owned enterprises through Haiyue large model + commercial AI + Haiyue software. Regarding the large model, Haiyue V3.0 is China's first dual-registered vertical enterprise service model for both model and algorithm, featuring multi-model, multi-modal, and large-small integration architecture, while providing low-code, graphical training/fine-tuning tools. It has been deployed at clients including Beijing Tongrentang. For commercial AI, AI V1.0 provides over 100 intelligent agent construction services covering finance, supply chain, and project management domains, having been implemented at Chongqing SASAC and Shanxi Guoyun by H1 2025. Additionally, the Haiyue software product line has achieved intelligent upgrades centered on the Haiyue large model: Haiyue PaaS V8.0, intelligent ERP, HCM, and state-owned asset online supervision platforms achieved breakthroughs with clients including Datang Group, Guohua Energy, China Energy Engineering, China Supply and Marketing Group, China Southern Airlines, and multiple local SASACs in H1.

Small and Medium Enterprise Market: In H1, the company launched Inspur Haiyue inSuite Standard Edition V5.0 specifically for high-growth SMEs, featuring lightweight and AI-native capabilities. It has completed integration of intelligent agents for key scenarios including supply chain, production, and finance, achieving breakthroughs with high-growth clients such as Sanyou Heavy Industry, Zhiren Jingxing, and Huamei Shengye. In the tax and finance domain: Cloud Business Finance V6.0 has integrated finance, document, and inventory modules; "Cloud Xiaoyi Intelligent Assistant" successfully created a digital business-finance expert for enterprise operational analysis and decision-making efficiency improvement; Inspur Yiyun deepened partnerships with Bank of Communications and Postal Savings Bank, with cloud accounting and other products launched on DingTalk and WPS.

**Management Software Intelligent Upgrades Sign Central SOE Leaders, IoT Solutions Deepen Manufacturing Focus and Expand Overseas**

Management Software: In digital finance, multiple functions were developed to help financial shared service centers transform into profit centers, while expanding treasury management business scenarios. For core ERP, supply chain integrated planning systems were developed supporting efficient computation of ultra-large BOMs; supply chain integration software maintains the top market share domestically and signed strategic clients including COFCO Group and China National Heavy Duty Truck Group. In telecommunications and information, low-altitude intelligent networks and digital online design and review platforms were released. Digital services achieved central SOE market expansion, signing COFCO Group, Aluminum Corporation of China, and Haier (existing client).

IoT Solutions: Focusing on equipment manufacturing, intelligent manufacturing, and telecommunications information. In equipment manufacturing, Tianjin TBEA and Xikai Limited's intelligent factory construction became benchmark cases, while the company's MOM solution maintains top market share. In intelligent manufacturing, technical breakthroughs were achieved with the launch of Intelligent Grain Storage Large Model V3.0 and completion of domestic replacement for storage comprehensive control cabinets, storage AI integrated machines, and storage AI IoT gateways, signing Fujian Grain Storage and Anhui Grain Storage. In telecommunications information, multiple operational support and data center projects were signed, including Ya'an Data Lake Medical-Industrial Intelligence Computing Center, National Marine Environmental Forecasting Center Phase II, and Mianyang High-tech Public Data Center. The company continues expanding overseas markets, newly landing the Algeria Medical Data Center project and establishing partnerships with BetaIndustrial, Clear Vision, BMC, Mobily and other enterprises.

**Risk Factors:** Macroeconomic impact on downstream demand, intensified market competition, slower-than-expected new business progress, slower-than-expected key client cooperation progress, slower-than-expected product iteration, etc.