Main points of investment

Backed by Tianjin SASAC, the business transformation focuses on three major digital businesses: after the company spun off real estate and related assets in 2022, the main business focuses on software development and cloud services, system integration solutions, Internet data center construction and hosting services. Tianjin SASAC is the actual controller of the company, and the company is the only enterprise with digital ability in Tianjin state-owned assets system. In 2022, the company achieved revenue of 906 million yuan, an increase of 11% over the same period last year, and a net profit of 401 million yuan. After focusing on the digital business, the growth is full of momentum. In July 2023, the company plans to raise 3.436 billion yuan for the three major businesses of computing, Xinchuang and industrial software.

Computing power: public computing power builder, cooperation with NVIDIA Corp can be expected in the future: public computing power is one of the important directions for the development of Chinese computing power in the future. as an enterprise controlled by Tianjin SASAC, the company already has 4 data centers with a total of 4567 cabinets. The company plans to build about 5000 new cabinets, which is expected to contribute to the construction of public computing power. On July 11, 2023, NVIDIA Corp NVIDIA Jetson China product solution team visited Zhuolang Technology, and the two sides will discuss the business in smart manufacturing, smart city and other areas around the technological advantages of NVIDIA Jetson.

Industrial software: layout production manufacturing industrial software, Beijing-Tianjin-Hebei Industrial Software Base Promoter: the company has Zhuolang Tiangong "series of industrial software, mainly including industrial Internet platform, MES, WMS, APS, data acquisition platform and so on. The company's industrial software products have penetrated into eight major industries, such as new energy, electronic assembly and automotive industry, and have been recognized by the industry's leading customers. Manufacturing industrial software already has the logic of high-end market substitution, and with the opening of application scenarios, the localization rate is expected to accelerate. The scale of China's MES market does not match the global proportion of China's manufacturing scale, and there is a broad market space in the future.

Xinchuang: layout cloud desktop, state-owned assets cloud business can be expected: the company's main layout Xin Chuangyun desktop and state-owned assets cloud. The company's "Zhuolang Kunlun Cloud" series of cloud products include cloud desktops, private clouds and super-converged products. Tianjin State-owned assets system Xinchuang adaptation Center is built in Zhuolang Science and Technology Park, which is mainly responsible for product selection, scheme design and acceptance. We expect Zhuolang Technology to become the construction and operator of Tianjin State-owned assets Cloud. By 2022, the industry Xinchuang PC stock is about 60 million, and there is still a lot of room for improvement in the penetration of cloud desktops overseas. We estimate that state-owned assets cloud will have hundreds of billions of market space in 2025.

Profit forecast and investment rating: Zhuolang Science and Technology is backed by Tianjin SASAC, the only enterprise with digital ability in Tianjin state-owned assets system. The company's three major businesses of computing power, Xinchuang and industrial software are working together, and it is expected to reach a cooperation with NVIDIA Corp in computing power. Cloud desktop products will benefit from the accelerated promotion of Xinchuang, and industrial software has been recognized by the industry's leading customers. Based on this, we estimate that the net profit of homing from 2023 to 2025 will be RMB 384 million respectively. Cover for the first time, give "buy"

Rating.

Risk tips: policy promotion is not as expected; technology research and development is not as expected; friction between China and the United States is escalating.