Event
On August 25, the company disclosed the semi-annual report of 2022 that in the first half of 2022, the company realized operating income of 106 million yuan, an increase of 9.23% over the same period last year; net profit of 14.69 million yuan, down 49.11% from the same period last year; and net profit of 4 million yuan, a decrease of 80.69% over the same period last year.
Brief comment
The scale of the global firmware market follows the expansion of cloud computing, and the scale of the Chinese market is expected to accelerate. Gartner data show that the global cloud computing market recovers with the economic recovery, and the domestic public cloud and private cloud market in 2021 will grow by 71% and 29% compared with the same period last year. Under the trend of digital transformation and localization in China, the scale of domestic ancient construction market will accelerate.
The core firmware of cloud computing is the domestic leader to realize the full adaptation of mainstream domestic chips. The company achieved cloud computing core firmware business income of 66 million yuan in the first half of 2022, an increase of 6.9% over the same period last year, which was affirmed by a large number of equipment manufacturers. The company increases the research and development of Byocore 2.0, improves the function and realizes the adaptation for Kunpeng, Feiteng, Longxin, Mega Core, Haiguang and Shenwei, and jointly promotes the process of chip localization. As a mainstream domestic chip adaptation development firmware manufacturer with scarce market, the company is expected to benefit from the scale expansion of Xinchuang wave.
Launch the security Internet of things cloud product "Zhuo Hillhouse" to achieve a complete set of smart building SaaS solutions. The company realized 348.4 billion yuan in cloud service business revenue in the first half of 2022, an increase of 3.7% over the same period last year. Starting from the real scene of customers, the company launched the security Internet of things cloud "Zhuo Hillhouse", using GIS map, 3D panoramic display and other technologies, using cloud platform architecture to provide customers with customized / standardized smart building solutions.
Increase investment in R & D and consolidate core competitiveness. The company invested 26.89 million yuan in R & D in the first half of 2022, and the R & D expenditure rate increased by 6.8%, mainly invested in domestic BIOS/BMC product development and the improvement of Zhuo Yiyun platform. The company's BIOS products have higher technology and barriers, and the gradual improvement of Byocore 2.0 functions and the coverage of a wider range of chips will help to consolidate its core competitiveness.
The company's cloud computing equipment core firmware business benefits from the domestic digital wave and innovation trend, and is expected to achieve rapid scale growth; cloud service business has independent property rights cloud platform architecture to provide customers with deeper and wider services. We estimate that the 22-24 net profit of the company will be 0.46 million 0.78 / 130 million yuan respectively, corresponding to PE68/40/24 times, covering for the first time and giving a "buy" rating.
Risk tips: repeated risks of the epidemic, the risk of changes in the competition pattern, the process of domestic digital transformation is not as expected, the risk of not being able to obtain Intel Corp's renewal of authorization, and so on.