Incident: On September 26, the National “Eastern and Western Computing” Industry Alliance, founded by the National Information Center, the Gansu Provincial Development and Reform Commission, the Shanghai Minhang District Government, the Shenzhen Development and Reform Commission, and well-known enterprises such as Huawei, Tencent, Didi, China Mobile, and China Unicom, was established in Lanzhou, Gansu Province. This industry alliance will build a platform for connecting the supply and demand of computing power between East and West, optimize the collaborative development pattern of computing power resources in the east, central and western parts of China, and help form a market for data elements that circulate freely, be allocated as needed, and effectively shared.
The Gansu provincial government and Shanghai Guoxin Sharp's investment management partnership jointly initiated the establishment of the “Eastern Digital Western Computing” industry guidance fund in order to promote the country's “Eastern Digital Western Computing” industry guidance fund. Currently, the capital platform for the big data industry has been settled in Shanghai's Hongqiao Fund Town, with a total capital investment of 35 billion yuan. Among them, the Shanghai Shagang Guoxin Big Data Parent Fund (Phase I) to be jointly established by Shagang Group and Guoxin Zhongshuo is 5 billion yuan, and the platform company Shanghai Jinhuan Fund Investment Management Company to be set up by Shagang Group is 30 billion yuan.
The “Eastern Digital and Western Computing” industry alliance is of great significance and is expected to achieve common prosperity in the digital economy of the East and West.
The tight computing power resources in eastern China coexist with insufficient demand for computing power in the west, and the regional digital infrastructure and application space layout need to be optimized urgently. According to the alliance declaration, Gansu Province will give full play to the advantages of local energy and computing power resources, combine the advantages of the digital economy industry of Shanghai and Shenzhen, and target computing power demand. While strongly guaranteeing the digital development of the eastern region, the “East Digital and Western Computing” industry alliance will also create new digital economic growth poles in the central and western regions, which will help form a new pattern of coordinated development in the East, Central, and West regions linked by data to achieve shared prosperity in the digital economy of the East and West.
The Group joined hands to “count east and west” in the strategic layout of state-owned assets, highlighting the leading position of the industry. The cooperation reached between Shagang Group and the state-owned platform of the National Information Center shows to a certain extent that the asset quality and technical strength of Shagang and GlobalSwitch have been recognized. Joining hands with state-owned platforms and government support, the company is expected to quickly improve the domestic IDC layout, form collaboration with GS's overseas nodes to create the only IDC company in the world that has a layout within and outside of China and achieves global operation. It is also expected that its resources and technological advantages will be fully exploited in the “counting east and west” industry, driving the development of the western digital economy and achieving a win-win situation for the company's own value and social value.
Investment advice: We forecast GS2020-2021 EBITDA of £3/330 million respectively. Considering the high prosperity of the IDC industry and the scarcity of GS assets, we will maintain the “buy” rating. The target price is 16 yuan, corresponding to EV/EBITDA45X in 2020.
Risk warning: The acquisition process is slow, GS revenue falls short of expectations, profits in the main steel industry are declining, and the fixed increase plan is uncertain.
