CICC: Maintains outperform rating on Bairong-W (06608), raises target price to HK$14.8

CICC released a research report stating that considering the uncertainty brought by the tightening of regulations in the second half of the year, it will maintain the profit forecast for BAIRONG-W (06608) 2025e/2026e non-generally accepted accounting principles (non-GAAP) net profit. The company's current trading is at 16.3/12.8x 25e/26e adjusted P/E, and considering the company's medium to long-term growth potential, the target price is raised by 15% to HK$14.8 (corresponding to 25e/26e 19.6x/15.3x adjusted P/E and 20% upside potential), maintaining an outperform industry rating. CICC's main points are as follows: Bairongyun-Chuang's 1H25 non-GAAP net profit exceeded the bank's expectations The company's 1H25 revenue increased by +22% year-on-year to RMB 1.61 billion, gross profit increased by +22% year-on-year to RMB 1.18 billion, gross margin increased by +0.2 percentage points year-on-year to 73.4%, non-GAAP net profit increased by +29% year-on-year to RMB 254 million, and non-GAAP net profit margin increased by +0.8 percentage points year-on-year to 15.8%, exceeding the bank's and the market's previous expectations. The main reason is the rapid growth achieved under the resonance of supply and demand in the financial industry. MaaS business resumed double-digit growth, contributing steady cash flow The company's 1H25 MaaS business revenue increased by +19% year-on-year to RMB 502 million, core customer retention rate increased to 98%, number increased by +1% year-on-year to 167, and corresponding customer average income increased by +14% year-on-year to RMB 2.28 million as the "stabilizing business" contributed to the company's revenue growth; in the medium to long term, the company will further expand horizontally into non-financial fields such as operators/retail/human resources/travel in addition to the financial field. The bank believes that this business may further release growth potential. The resonance of cloud supply and demand in the financial industry is the main driving force for BaaS growth, with the product matrix continuously expanding The company's 1H25 BaaS service revenue increased by +23% year-on-year to RMB 1.1 billion: 1) the company's BaaS-financial industry cloud 1H25 revenue increased by +45% year-on-year to RMB 857 million, accounting for 77% of BaaS business revenue, with the main reason for the high year-on-year growth being the optimization of the supply-side model and the increase in customer budget allocation on the demand side. In the first half of 2025, the company's self-developed large-language model, BR-LMM, was included in the Ministry of Industry and Information Technology record, and based on this model, new products such as Baiguang CybotStar enterprise-level intelligent bodies platform, digital humans, Voice GPT intelligent voice were launched, further improving the product matrix. Looking ahead, the bank believes that the company is expected to achieve dual growth in deepening vertically and expanding horizontally; 2) the company's BaaS-insurance industry cloud 1H25 revenue decreased by -19% year-on-year to RMB 253 million, prompting the insurance premium scale to increase by +9%, with revenue under pressure mainly due to the impact of the "reporting and underwriting" policy, multiple insurance products being removed from the shelves, and a slight decline in commission rates. Risk warning: Industry growth slows down; market competition exceeds expectations; third-party data sources are restricted.