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there are strong competitors in the fields of medical, automotive, urban and enterprise services that are undergoing intelligent transformation. neusoft group is courageous in its four-pronged attack on software outsourcing and intelligent transformation, but it is also surrounded by strong competitors and faces great pressure.

text｜li jian

neusoft group is the first software listed company in china. as early as 1997, neusoft group was able to invest 500 million yuan to build the first software park in china.

it was also in this year that neusoft group developed the first clinical ct machine in china, breaking the monopoly of overseas companies for many years.

at that time, neusoft group was in full swing, and soon the number of employees in neusoft group exceeded 10,000, making it the first software company with 10,000 employees. liu jiren, the founder and chairman, was also known as the "software godfather" in the industry. however, neusoft group started out by relying on outsourcing business, and by 2006, it became the first software company in china with outsourcing revenue exceeding 100 million us dollars.

after years of development, neusoft group has now become a giant with four major sectors: healthcare, smart car connectivity, smart cities and enterprise connectivity, and is no longer willing to mention outsourcing business.

in 2022, neusoft group experienced its first loss since its listing. this year, neusoft group's net loss attributable to the parent company was 347 million yuan, a year-on-year decrease of 133.62%, setting a new low since its listing. liu jiren publicly stated that "in 2022, neusoft group faced the impact of many external uncertainties such as economic downward pressure and two-way fluctuations in exchange rates, especially the impact in the fourth quarter, which seriously dragged down neusoft's business and project rhythm, and the company's performance did not achieve expected results..." after the performance was released, neusoft group's stock price fell by 6 percentage points the next day. the capital market began to question neusoft group.

liu jiren chose to fight back with practical actions to embrace artificial intelligence. in the first half of 2024, neusoft group achieved a double increase in revenue and net profit. the ai ​​wave is surging, and neusoft group seems to have regained its strength through ai.

however, what opportunities does ai bring to neusoft group?

relying on intelligence

although neusoft group has four major businesses and revenue of over 10 billion, it still does not have a label that can be summarized in the eyes of the outside world. as a result, everyone has always had the impression that neusoft group is still an "outsourcing company."

as we all know, outsourcing is a very low-end link in the industrial chain. because of outsourcing, neusoft group has been questioned by the outside world for many years. what is its core technology?

liu jiren wanted to tear off the label of outsourcing from neusoft group. after much deliberation, he found the way out: "intelligence". in march 2024, neusoft group announced the full launch of its intelligent solution strategy, focusing on businesses such as smart cities, smart cars, healthcare and enterprise digital transformation, and creating ai-enabled solutions, data-valued solutions and service-oriented solutions.

however, in the healthcare sector, there are competitors that are more professional, skilled, and mature than neusoft. the same is true for smart cars and smart cities. it will be difficult for neusoft to make a breakthrough.

judging from the operating conditions in the first half of 2024 alone, the revenue of the three businesses of smart cars, smart cities and enterprise interconnection has shown significant growth. among them, the revenue growth of enterprise interconnection reached 26.59%. the revenue growth of enterprise interconnection is due to the embedding of large language model capabilities, as well as the development of cross-domain data fusion governance and data service business. at the same time, the enterprise service business has gone overseas to malaysia, indonesia, vietnam and other places, and the scale of overseas business has doubled.

in the field of intelligent car interconnection, neusoft group has received orders from many mainstream domestic manufacturers such as byd, changan, and great wall. in terms of smart city business, neusoft group has made significant progress in participating in the construction of digital government and the integrated development of smart cities, and in assisting the construction and upgrading of new urban infrastructure.

the only sector whose revenue declined year-on-year was the healthcare and social security business. healthcare and social security business has always been the "heart and soul" of neusoft group, with gross profit margins maintained at over 40% all year round. however, in the first half of 2024, the revenue of the healthcare sector fell by 8.22% year-on-year, and its share of the group's revenue dropped from 24.39% to 16.05%, making it the business with the least revenue contribution among the four major businesses. you should know that as of june 30, 2024, neusoft's smart medical business has been implemented in 31 provinces, municipalities and autonomous regions across the country, serving more than 600 tertiary hospitals and more than 2,800 medical institution customers.

thanks to its intelligent transformation, neusoft group's business has received clear positive feedback. however, in a rapidly changing market, it remains unknown whether neusoft group can maintain its growth in the future.

want to make money

liu jiren has always had the dream of building a cluster of listed companies under the neusoft group. therefore, in recent years, neusoft group has continuously spun off its subsidiaries, and their performance is no longer included in the consolidated scope of the group.

as early as 2011, neusoft group spun off its it higher education business and named it neusoft education. after many twists and turns, it finally landed on the hong kong stock exchange in 2020. on the first day of listing, neusoft education soared by more than 25% and its market value reached hk$4.5 billion.

after liu jiren tasted the sweetness of independent spin-offs, he started another round of spin-offs. neusoft medical, neusoft xikang and neusoft wanghai (later renamed wanghai xikang) were spun off from the highly anticipated medical and health sector. these three independently spun-off companies are all aiming for listing. but it is not that easy to go public. neusoft xikang went through four submissions before landing on the hong kong stock exchange in september 2023. on the first day of listing, neusoft xikang closed down 43% below the issue price. neusoft medical and wanghai xikang in the medical and health sector are still preparing for listing.

in addition, neusoft group, alpine, and shenyang furuichi jointly invested in the establishment of "neusoft rich", a company focusing on the research and development of autonomous driving. after completing a financing of 650 million yuan in 2021, it was also independently spun off. obviously, neusoft rich's goal is also to enter the capital market.

in the view of digital intelligence research society, neusoft group's spin-off of subsidiaries is aimed at entering the capital market and making quick money, which itself lacks long-termism in its business. moreover, if it continues to spin off everything and wants to make money from everything, even if it becomes the first in the vertical category, it will only look strong, and it is still a "paper tiger" in essence.

however, if you set up such a big stall and cover so many businesses, the results will probably not be good.

from the current perspective, neusoft group is attacking from all sides with full confidence. however, there are too many roads to go, which makes many people confused about the main direction of the future. the intelligentization and ai directions mentioned by liu jiren are just empowerment and support, which are difficult to become the main business. it is better to focus on one thing and do a good job in a promising and profitable area.