On April 27, 2023, Data Port released the results for the first quarter of 2023. 1Q23 The company achieved revenue of 3.7 billion yuan, an increase of 8.6% over the previous year; realized net profit of 0.4 billion yuan, an increase of 242.0% over the previous year; profit before interest, tax, depreciation and amortization (EBITDA) was 260 million yuan, an increase of 12.1% over the previous year.
Costs have improved, and the project can be expected to be implemented. 1Q23 The company's gross profit margin was 29.4%, an increase of 4.3 pct over the same period last year. We believe the decline in depreciation was the main reason driving the increase in gross margin. Data centers are mainly capital-intensive industries, and the investment requirements for ICT equipment are high, resulting in fixed assets accounting for a relatively large share of fixed assets (1Q22 to 1Q233 fixed assets accounted for 63%/65% of total assets, respectively). As of December 31, '22, the company had 74,000 cabinets. The company's business scale from 2018 to 2022 was 68/141/250/367/371MW, respectively, and the business expansion rate from 2019 to 2022 was 107.2%/77.4%/46.6%/1.2%, respectively. We believe that as business expansion leveled off, early assets gradually reached their depreciation period, which boosted gross profit margins to a certain extent. Looking at the cost rate, the company's management expenses ratio decreased by 1.2 pct year-on-year in 1Q23. We believe that the improvement in management efficiency is mainly due to the scaling up of the company's business. It is worth noting that the company's R&D expenditure rate increased by 1.1 pct in 1Q23. We believe this change reflects the company's increased investment in data center operation and maintenance, and with the maturity of the company's data center operation and maintenance platforms, unmanned inspection and other technologies, the future management cost rate level is expected to be optimized again.
Demand for ubiquitous computing power connectivity is expected to increase, and innovation in computing power networks is expected to accelerate. Demand for ubiquitous computing power scenarios in finance, transportation, education, industry and other industries continues to grow. Users need more preferential and higher quality computing power services that can be accessed anytime, anywhere. Computing power networks derived from ubiquitous usage and transaction requirements of computing power have become the focus of next-generation computing power infrastructure development. China Unicom has launched pilot computing power network construction projects in many parts of the country to achieve computing power resource scheduling and sensing through computing power network business chains, network slicing, and resource awareness, forming an integrated cloud network security service.
China Telecom focuses on the “cloud” as the core in the computing power network construction process, focusing on the integration of the three major resources of network, computing power, and storage, promoting the continuous upgrading of Tianyi Cloud and Tianyi edge nodes to achieve unified management and scheduling of Tianyi Cloud nodes. Cloud network integration and cloud-edge collaboration are advantages of Telecom Cloud. China Mobile focuses on transforming the underlying computing power infrastructure, building a general computing power network based on X86 and ARM architectures, and continuously enriching intelligent computing power based on GPUs and ASICs. We believe that China is in an accelerated period of digital transformation in various industries. The application scenarios of digital infrastructure represented by data centers will continue to expand further, the data center industry will usher in greater opportunities, and the development prospects will be broader.
Investment advice: We are optimistic that demand from downstream enterprises will recover in the context of the “Eastern and Western Computing” +AI large-scale parameter model. We believe that with the smooth implementation of the company's multi-location data center expansion, the diversified customer structure is also expected to enhance the large-scale effect of the company's revenue and bring about a more stable operating cash flow. It is estimated that from 23 to 25, the company's revenue was 1,66/185/1.99 billion yuan, EBITDA of 11.0/133/1.52 billion yuan, and net profit of 1.6/244/260 million yuan, corresponding to the closing price of P/E 70/49/44x on April 28, maintaining the “recommended” rating.
Risk warning: risk of high customer concentration, risk of increased market competition, risk of project delivery.