First, the data center field continues to climb, the rapid expansion of the computer room performance can continue to cultivate data services and cloud computing. The company has been engaged in data basic services and cloud computing for nearly 20 years, and is a data center provider for companies such as BABA and Kuaishou Technology. From 2019 to 2021, it has successively acquired important customers such as BABA, Kuaishou Technology and Baidu, Inc.. At the same time, it is Tencent Cloud Regional Service Authorization Center.
The size of the data center continues to expand, and performance is expected to grow rapidly. In 2021, the company's revenue growth accelerated, achieving operating income of 1.205 billion yuan, an increase of 43.35% over the same period last year, while net profit reached 143 million yuan in 2021, down 7.67% from the same period last year due to non-recurrent profit and loss fluctuations. The company's fixed assets and projects under construction continue to grow, the future computer room is expected to continue to put into production, long-term growth confidence.
Second, the policy increases to boost the development of the industry, the digital economy promotes the flow growth, the IDC demand is strong, the policy driving force is strong, and the industry develops orderly and rapidly. In recent years, China has issued a number of policies to promote the development of the data center industry. at the same time, the launch of "calculation from the East to the West" makes normative requirements for shelf rate and energy efficiency indicators, which helps the orderly development of the industry, and also highlights the scarcity of cabinet resources in the front-line areas.
The digital economy continues to build and the downstream demand is exuberant. China promotes the construction of digital economy, and the proportion of digital economy in GDP has risen to 38.6% in 2020. Under the construction of digital economy, the development of 5G/ Gigabit Network / Internet of things / Cloud Computing will increase data flow and drive the demand for downstream data storage to remain strong.
Third, big customers escort, grasp the core resources and continue to broaden the layout, new energy opens the growth space for companies to bind high-quality customer resources. Ofei data signed contracts with BABA, Kuaishou Technology and Baidu, Inc. in 2019, 2020 and 2022 respectively, of which the contract with Kuaishou Technology is 5 years and 330 million yuan; the contract with Ali is about 500 million in 5 years, which is automatically renewed to 8 years when it expires; and Baidu, Inc. 's contract is 950 million yuan in 6 years. Binding major customers to provide strong support for development.
Holding the core assets of the data center, it continues to expand and has a strong growth momentum. The company has scarce computer room assets in core areas including Beijing-Tianjin-Hebei region, Yangtze River Delta region and Guangdong-Hong Kong-Macau Greater Bay Area. By 2021, the company has a total of about 19900 cabinets, which has the advantage of first-mover layout. At the same time, the company has a large scale of construction / planning projects (more than 50,000) and has a strong driving force for future growth.
Expand the product boundary, new energy helps to take off. The subsidiary Ofei New Energy Photovoltaic business has signed more than 30 development projects with a total installed capacity close to 100MW and is expected to expand rapidly in the future. In addition, it will also help the company build a zero-carbon data center and improve customer experience and stickiness.
Fourth, profit forecast and valuation
The company is one of the leading companies in the data center and is expected to fully benefit from the increased demand for data centers brought about by the growth of traffic in the digital economy. It is estimated that the company's net profit from 2022 to 2024 is 1.91,2.68 and 405 million yuan respectively, corresponding to PE of 35,25 and 16 times. The comparable company has an average EV/EBITDA of 19x, valuing the company at 20 times EV/EBITDA in 2022, corresponding to the target price of 23.44 yuan, and giving it an "overweight" rating for the first time.
Risk hints: the progress of data center construction may be lower than expected, the shelving rate of data center may be lower than expected, the progress of policy implementation may be lower than expected, the risk of intensified competition in the industry, the risk of selecting comparable companies to be listed on different exchanges, the risk of some differences in valuation system, etc.