Event
The company issues its 2023 half-yearly report. The company's 2023H1 realized operating income of 5.012 billion yuan, down 21.70% from the same period last year; net profit from return to home was-633 million yuan; net profit from non-return to mother was-721 million yuan.
Industry Xinchuang bid intensive release, performance is expected to pick up in the second half of the year. The main reasons for the decline in the company's 23H1 operating revenue are as follows: 1) the replacement of Xinchuang stock market is coming to an end in the first half of the year, resulting in a sharp decline in stock market orders and depressed demand for new orders. 2) the continuous influence of the international situation has led to a decline in the company's international business orders and revenue. Recently, the Xinchuang market has shown a warming trend.
In August, the tender for the 6.5 billion Xinchuang equipment procurement project of China CITIC Bank Corporation was opened, of which the budget for the ARM chip server was 3.401 billion yuan. The company's server products based on Feiteng's new generation CPU S5000 series platform are accelerating, and it is expected that the performance of this generation of products will be greatly improved and will be highly competitive in the Xinchuang server market. With the recovery of Xinchuang market bidding, the company's Xinchuang machine and server products are expected to return to the peak of shipments.
China Electronics and Huawei have established a deep cooperative relationship to jointly build the "Pengteng" ecology. CEC's Feiteng CPU and Kirin OS's PKS ecology and Huawei's Kunpeng ecology are the two most important ecology of Xinchuang in China. Feiteng and Kunpeng CPU, which belong to the ARM instruction set, have been applied in batch in the fields of domestic government office, cloud computing, big data, finance, energy, rail transit and other industries. By building a unified "Pengteng" ecology, it will simplify the software and hardware adaptation and certification of ecological partners, expand the number of ecological partners, and promote the wide application of domestic basic software and hardware in various industries. As the ecological core enterprise of PKS, the company is expected to give full play to its advantages in manufacturing and channels in the future, deepen cooperation with Huawei and achieve complementary advantages.
Investment suggestion: as the national team of independent computing industry in China, the company is also an important shareholder of domestic CPU core enterprise Feiteng, and is expected to benefit from the acceleration of Xinchuang. The company's EPS is expected to be 0.13 / 0.19 / 0.26 in 2023-2025, maintaining a "buy" rating.
Risk hint: the promotion of Xinchuang is not as expected, the product research and development is not as expected, and the competition in the industry is intensified.