“Industry+Computing Power+Education” three-wheel drive revenue continues to grow
23H1 achieved revenue of 1,635 million yuan, an increase of 26.7%; net profit of 42 million yuan, a decrease of 44.5%; net profit of non-return of 38 million yuan, a decrease of 47.5%. 23Q2 The company achieved revenue of 839 million yuan, a year-on-year increase of 28.2%; net profit attributable to the parent group was 0.06 million yuan, a decrease of 84.4%; net profit after deducting non-net profit of 04 million yuan, a decrease of 89.7%. 23H1's revenue growth was mainly due to the strengthening of some customer expansion efforts.
We believe that the company is expected to achieve rapid revenue growth in the future, driven by industrial automation, the wave of AI models, and the information/localization of education. EPS in 23-25 is expected to be 0.67, 1.13, and 1.38 yuan, respectively. Comparable companies' 24E average is 19.5xPE (Wind). Considering the company's net profit CAGR of 42.5% in 23-25, which is higher than the average of comparable companies of 24.8%, 2024E was given 25.7xPE, corresponding to a target price of 29.04 yuan (previous value of 31.60), “buy”.
Product line continues to expand, driving rapid revenue growth
23H1's industry terminal/ICT infrastructure/industrial Internet of Things/other businesses achieved revenue of 10.3/3.8/0.4/190 million yuan respectively, an increase of 26.8/9.1/103.3/ 63.8%. 23H1's overall revenue growth rate is relatively fast. It is expected that the main reason is that the company relies on flexible manufacturing advantages and continuously improves product layout to achieve rapid revenue growth. 23H1's new products include: 1) Industry terminals: medium to large conference M2 hosts, 120PIN-defined OPS dedicated conference hosts, etc.; 2) ICT infrastructure: 2U rack-mounted high-performance servers, high-performance dual-channel P15DRE server motherboards, etc.; 3) Industrial Internet of Things:
JSOM-N8MC embedded core board, etc.
The transformation of industrial informatization is expected to drive the company's industrial control business revenue growth. According to Market and Market data, the global industrial computer market size increased year by year in 2016-2022, reaching 5 billion US dollars in 2022, with a year-on-year increase of 5.5%. We believe that as “Made in China 2025” and “Industry 4.0” continue to advance, the informatization transformation of domestic industrial enterprises is expected to release a large amount of procurement demand for industrial control products. At the same time, the company is actively laying out its own “Zhiwei Industrial” brand, providing full-stack solutions including industrial motherboards, core boards, industrial control machines, and edge computing machines. 23H1 has launched new products such as the IPC-4U820 rack-mounted industrial computer, which is expected to continue to benefit from opportunities for industrial transformation and achieve rapid revenue growth.
Increased demand for computing power hardware opens up room for the company to grow
According to IDC, the amount of data generated globally will increase from 16ZB in 2016 to 163ZB in 2025.
As the amount of data grows, the advent of the traffic era places higher demands on computing power equipment. According to Market Analysis, the global server market size in 2022 was $892.6 billion, and the CAGR is expected to be 9.3% in 23-30. In this context, the company actively lays out products in the field of computing power, and has successively launched related products such as AI servers and edge servers. According to the company's official website, in June 2023, the company launched E618 and E608 server modules equipped with the Jetson Orin NX and Jetson Orin Nano platforms, respectively, and continues to expand the edge computing power product matrix, which is expected to further open up space for growth based on performance advantages.
Risk warning: macroeconomic fluctuations; downstream demand falls short of expectations.