Event: the company recently released a report for the third quarter of 2021 that 2021Q1-Q3 realized operating income of 924 million yuan, an increase of 55.94% over the same period last year, realized net profit of 123 million yuan, up 3.07% over the same period last year, and deducted 138 million yuan of non-net profit, an increase of 77.67%.

Deducting the rapid growth of non-net profit, the increase in shelving rate promotes the gross profit margin: in the first three quarters of the company, the growth of the number of cabinets in the data center superimposed the shelving rate, realizing operating income of 924 million yuan, an increase of 55.94% over the same period last year, and a net profit of 123 million yuan, an increase of 3.07% over the same period last year. After deducting changes in the fair value of trading assets such as government subsidies and Zijin Storage, the net profit deducted from non-homing is 138 million yuan. There was a sharp increase of 77.67% over the same period last year, reaching 364 million yuan in EBITDA, an increase of 42.88%. Of this total, Q3 achieved revenue of 336 million yuan in a single quarter, an increase of 55.08% over the same period last year, and net profit / deduction of non-net profit of 0.5 / 49 million yuan, a substantial increase of 198.62% and 72.93% over the same period last year. In addition, with the increase in shelving rate, the company's gross profit margin in the first three quarters increased to 30.7% 1.99pct Q3 single-quarter gross profit margin increased 4.88pct to 31.44%.

The control of fees is relatively stable, and the cash flow of operating activities is improved: the sales / management / financial expenses of 2021Q3 Company are 0.1 / 0.23 / 60 million yuan, respectively, with an increase of 13.23% / 42% / 108.07%. The increase in financial expenses is mainly due to the increase in financial expenses and the increase in the scale of financing from January to September 2021, which leads to a large increase in interest payments. the three rates totaled 10.06%. Year-on-year slight increase in 0.97pct, fee control is relatively robust. In addition, the cash flow of the company's 2021Q3 operating activities was 238 million yuan, an increase of 96.5%, a substantial improvement over the same period last year.

The rack scale can be greatly expanded, and the advantage of front-line resources is significant: the number of IDC self-built cabinets has increased rapidly in recent years, and the performance dividend has continued to be released. The number of self-built cabinets exceeded the company's plan of 15000 cabinets in 2020, an increase of 120% over 2019. A number of data center projects will be built in 2021, including 25000 cabinets in Gu'an in Langfang, more than 10,000 cabinets in Nansha in Guangzhou, 3300 cabinets in Kunming, 2200 cabinets in Nanchang, Jiangxi Province, and 12000 cabinets in Tianjin. In the reserve construction of many projects, the rack scale is expected to expand significantly in the next few years, and all of them are located in first-tier and surrounding cities, with significant resource advantages. Due to the influence of policies such as power cuts, the demand for stable and reliable power supply data centers and the increase in prices, the company reached an intention to cooperate with Baidu, Inc. on the Nansha data center project during the reporting period. the company provides Baidu, Inc. with the service capacity of 2000 customized high-power data center cabinets and related value-added services, of which 500 cabinets will be delivered to Baidu, Inc. before February 28, 2022, under the influence of power cuts, greening and other policies in the future. Enterprises that are stable and reliable in first-tier cities with resource advantages, such as Ofei data, will have a competitive advantage.

Actively respond to the "double carbon" policy, increase research and development to promote the construction of green data centers: the company formulated the "data Center carbon Neutralization and New Energy Strategic Plan of Guangdong Aofei data Technology Co., Ltd." in July 2021, and obtained carbon neutralization certification in July, realizing an important part of the company's data center carbon neutralization and new energy strategic development plan. At present, the company has completed the record of the distributed photovoltaic power generation project of Langfang Xunyun data center to provide green power for the digital center. In addition, under the green trend of the data center, the company will increase its research and development on energy conservation and greening. The 2021Q3 R & D cost is 36 million yuan, an increase of 135.3%, and the R & D cost rate is 3.88%, which is higher than the same period last year.

On October 14, the company issued an announcement that wholly-owned subsidiaries intend to participate in the bidding for land use rights, which is to build the company's headquarters building and R & D base, and to provide support for the company's sustainable development and the improvement of its scientific research capability in the future. in the future, the company will increase its research and development in energy conservation and greening, and actively respond to national policies.

Investment suggestion: in view of the surge in data traffic driven by 5G + cloud computing, the rigid demand for IDC in the future, the rapid expansion of the company's data center scale, the steady progress of projects under construction, and the good operational aspects of the company, such as fee control and cash flow, it is estimated that the net profit of shareholders belonging to the parent company for 21-23 years is 1.95,2.65,392 million yuan respectively, earnings per share is 0.51,0.70,1.03 yuan per share, PE is 40X 29X respectively. 20x, maintain the "buy" rating.

Risk hints: industry competition intensifies risk, supply and demand imbalance leads to price decline risk, 5G and cloud computing popularity falls short of expected risk, company scale expansion leads to operation management risk, macroeconomic factor risk.