1. Long-term determination of investment in infrastructure and cloud computing business 1) Distribution business: with the rapid development of the industry, IT distribution is indispensable for the continuous migration of enterprise stock IT systems to the cloud, and the growth of superimposed data traffic has become the core driving force of IT infrastructure growth.
2) Cloud computing business: cloud computing is growing rapidly, with major customers leading the industry.
China's cloud infrastructure market reached $27.4 billion last year, up 45 per cent from a year earlier, according to the 2021 China Cloud Computing Market report released by market consultancy Canalys.
2. The company has the ability to transcend the economic cycle, the cloud computing business is growing at a high speed, and the fundamentals are stronger than the industry.
1) through the economic cycle, the ability of sustained high income growth is strong: after 20 years of listing, the company's turnover can maintain strong growth: during the 20 years of listing, the average annual growth rate is 27%.
2) lay out the cloud computing market based on channel and technological advantages, create the second growth curve with high gross margin: acquire Cloud Star data, position itself as a neutral third cloud management service provider, and devote itself to solving the problems in the process of cloud access, cloud use and cloud management for customers. Provide full-process support services from solution to landing, and the market share of cloud computing services continues to increase.
3) Gross profit margin, ROE and other profitability and operating ability indicators are higher than those of their peers, highlighting competitiveness: the gross profit margin of distribution business is low, and the fluctuation of gross profit margin will affect the overall corporate profitability. Companies in the same industry have advantages in gross profit margin, and corporate profitability ROE, inventory turnover and other indicators are also higher than those of their peers.
3. The company continues to buy back, demonstrating the confidence of business growth.
4. corporate profit forecast and comparable corporate valuation
1) under the background of the accelerated development of the global digital economy and the country's efforts to promote new infrastructure, the new round of scientific and technological revolution and industrial revolution promote the development of various industries to a new stage. We believe that the company, as a leading enterprise in the technology service and cloud service industry, will continue to achieve rapid growth with its excellent technical strength and service capacity.
2) the estimated 2022-2024 revenue of the company is HK $107.58 billion, or HK $1.18 per share, corresponding to HK $4.88 per share on September 16, 2022. The PE of the company in 2022-2024 is 5.26ppm 4.463.67 times, the industry average valuation is 24 times, and the valuation of A-share related distribution and cloud computing service targets is about 10 times. Taking into account the liquidity and valuation characteristics of the Hong Kong stock market, the company is currently undervalued, covering the "overweight" rating for the first time.
5. Risk hint: the downward IT expenditure of the global economy slows down; the epidemic situation of COVID-19 is repeated.