CITIC SEC: Initiates Coverage on XUNCE (03317) with "Buy" Rating, Target Price of HK$160.

CITIC SEC released a research report stating that XUNCE Technology (03317) is a leading domestic real-time data infrastructure supplier. Benefiting from the policy dividend of data elements and the urgent need for downstream digital transformation, the industry scale is expected to maintain double-digit growth in the next five years. As AI tools like OpenClaw become more mature and deepen their operations, the demand for data governance to support the landing of AI tools is increasing. The bank believes that XUNCE, as a leading company in the real-time data infrastructure industry, will benefit in the long term from the demand for data infrastructure brought by the implementation of AI. The company is given a target market value of HK$51.7 billion by 2026, corresponding to a target price of HK$160, and a "hold" rating is given. Key points of CITIC SEC are as follows: Company profile: The company focuses on real-time data infrastructure and analytics, with a leading market share. XUNCE was established in April 2016 and went public on the Hong Kong Stock Exchange on December 30, 2025. The company is a leading provider of real-time data infrastructure and analytics solutions in China. According to Frost & Sullivan, the company's market share in the real-time data infrastructure and analytics market in China is 3.4%, ranking fourth, and in the asset management industry in China, its market share is 11.6%, ranking first. Industry analysis: The market for real-time data infrastructure and analytics in China is currently in a high-speed penetration phase. Due to the policy dividend of data elements and the urgent need for digital transformation in downstream industries, the industry scale is expected to maintain double-digit growth in the next five years. The penetration rate is expected to increase significantly, highlighting structural opportunities. According to Frost & Sullivan's calculations in the company's prospectus, the market size of real-time data infrastructure and analytics in China has rapidly grown from a basic level in 2020 to RMB 18.7 billion in 2024, with a compound annual growth rate of 46.1% from 2020 to 2024. Looking ahead, Frost & Sullivan predicts that the market will continue to expand with a compound annual growth rate of 22.0%, reaching RMB 50.5 billion in 2029, driven by policy initiatives and the huge demand for digital transformation across industries. Overseas comparison: Palantir accelerates the landing of AI applications in the enterprise through platform development. The main problem facing traditional AI commercialization is the lack of universality and flexibility of large-scale pre-trained models, especially in enterprise applications. Although large models perform well in natural language processing and generative tasks, they lack the customization ability for specific industries and enterprise needs. According to Palantir's website, Palantir's AIP achieves the development of AI application scenarios by adopting a "large model + small model" approach. The large model acts as the command center, responsible for understanding the operator's instructions, and then calls on a vast library of functional models to implement specific applications. Palantir's customized private domain data platform effectively addresses the flexibility and accuracy issues of large universal models, and better meets the specific needs of client companies, relying on its powerful semantic understanding and wide model integration capabilities. The bank believes that Palantir's success illustrates that AI's deeper penetration in the enterprise cannot be separated from the further development and improvement of internal data governance and related data infrastructure. Growth potential: Solid fundamentals and diversified revenue support growth. Based on the company's fundamental and financial indicators, as the company's revenue continues to grow and its customer base expands, the bank expects the company's economies of scale to gradually manifest and achieve profitability in 2026. In terms of revenue structure, the company's efficiency continues to improve, and in terms of revenue sources and industries, the company initially focused on the asset management industry. According to the company's prospectus, the industry's revenue share is expected to decrease from 74.4% to 38.7% from 2022 to 2024, while successfully entering into diversified areas such as financial services (excluding asset management), urban management, manufacturing management, and telecommunications. In 2024, the contribution of non-asset management industry revenue reached 61.3%, achieving revenue diversification. Profit forecast, valuation, and rating: Driven by customer scale and ARPU growth, the bank expects the company's overall revenue to be 1.28/2.33/3.45 billion yuan in 2025-2027, corresponding to growth rates of 103%/82%/48%. The bank expects the company to maintain a high gross profit margin level and stabilize its profits. The bank estimates the company's net profit to be -130/272/841 million yuan in 2025-2027. In terms of valuation, the bank uses Snowflake and Palantir as benchmark companies, and uses PS and P-FCF valuation methods. Based on the company's financial situation for 2026, the bank gives the company an industry average valuation level (comparable companies with an average PS of 20 times, P-FCF of 115 times, LSEG consensus estimates), and gives the company a target market value of HK$51.7 billion in 2026, corresponding to a target price of HK$160, representing a 13% increase from the current price. First coverage, given a "hold" rating.