CICC issued a research report stating that considering the business expansion uncertainties brought by tightened regulations in the second half of the year, the firm largely maintains its unchanged non-GAAP net profit forecasts for BAIRONG-W (06608) for 2025e/2026e. The company currently trades at 16.3/12.8x 25e/26e adjusted P/E. Taking into account the company's medium to long-term growth capabilities, CICC raised its target price by 15% to HK$14.8 (corresponding to 25e/26e 19.6x/15.3x adjusted P/E with 20% upside potential), maintaining its outperform rating.

CICC's key viewpoints are as follows:

BAIRONG's 1H25 Non-GAAP Net Profit Exceeded Bank's Expectations

The company's 1H25 revenue increased 22% year-over-year to RMB1.61 billion, gross profit rose 22% year-over-year to RMB1.18 billion, gross margin increased 0.2 percentage points year-over-year to 73.4%, non-GAAP net profit surged 29% year-over-year to RMB254 million, and non-GAAP net profit margin expanded 0.8 percentage points year-over-year to 15.8%. These results exceeded the bank's and market's prior expectations, primarily driven by rapid growth achieved through supply-demand resonance in the financial industry cloud sector.

MaaS Business Returns to Double-Digit Growth, Contributing Stable Cash Flow

The company's 1H25 MaaS business revenue increased 19% year-over-year to RMB502 million. Core customer retention rate improved to 98%, with customer count growing 1% year-over-year to 167, corresponding to average revenue per customer increasing 14% year-over-year to RMB2.28 million. As a "ballast" business, it provides stable growth contribution to company revenue. From a medium to long-term perspective, the company will further expand product application scenarios horizontally (such as telecommunications/retail/human resources/transportation and other non-financial sectors) to pan-financial fields. The bank believes this business segment may further unleash growth potential.

Supply-Demand Resonance in Financial Industry Cloud Serves as Main Driver for BaaS Growth, Product Matrix Continues to Expand

The company's 1H25 BaaS services revenue increased 23% year-over-year to RMB1.10 billion: 1) The company's BaaS-Financial Industry Cloud 1H25 revenue surged 45% year-over-year to RMB857 million, accounting for 77% of BaaS business revenue. The significant growth was primarily due to supply-side model effectiveness optimization driving improved unit cost conversion efficiency, combined with demand-side increases in customer budget allocation. In the first half of 2025, the company's self-developed large language model BR-LLM received approval from the Ministry of Industry and Information Technology. Based on this model, the company launched new products including the CybotStar enterprise-level intelligent agent platform, digital humans, and Voice GPT intelligent voice services, further improving its product matrix. Looking ahead, the bank believes the company is positioned to achieve dual growth through vertical deepening and horizontal expansion. 2) The company's BaaS-Insurance Industry Cloud 1H25 revenue declined 19% year-over-year to RMB253 million, while facilitated premium scale increased 9% year-over-year. Revenue pressure was mainly due to the impact of "reporting-implementation alignment" policies, resulting in the removal of multiple insurance products and declining commission rates.

Risk Warnings: Industry growth slowdown; market competition exceeding expectations; limitations on third-party data sources