Domestic computer firmware leader: Zhuo Yi Information is a leading BIOS firmware manufacturer in China, with the original business of providing cloud service solutions to government, enterprise, building, cultural and other customers. Since the acquisition of Baiao Software in 2012, it has formed two major business lines of BIOS firmware + cloud services, and is the only independent BIOS firmware supplier authorized by Intel Corp at Chinese mainland. Benefiting from the lagging demand release, the company's cloud business grew by about 77% to 62 million yuan in the first half of 2023, driving the company's overall revenue to grow by 27% to 135 million yuan. In the first half of 2023, the company's net profit due to the disposal of subsidiaries increased greatly to 50.72 million yuan, an increase of about 225% over the same period last year, deducting 4.61 million yuan from non-net profit, an increase of about 15.51% over the same period last year.
Industry Xinchuang is expected to lead to a double rise in the volume and price of firmware business: the global BIOS firmware industry has long been dominated by American companies, and the domestic firmware business ecology is expected to be reshaped due to domestic demand.
The company is one of the few domestic manufacturers to master X86, ARM, MIPS and other multi-architecture BIOS technology and BMC firmware development technology, and has established business cooperation with Huawei and other well-known host manufacturers. With the promotion of industry innovation, the release of server demand is expected to lead the company's server firmware business to achieve rapid growth, thus forming a double rise in volume and price of firmware business.
Acquisition of Ai Puyang Shenzhen layout IDE Ecology: in June 2023, the company acquired a 52% stake in Ai Puyang Shenzhen and plans to carry out integrated development tools (IDE) products and related new businesses. Apu Yang's main business in Shenzhen specializes in providing IDE products for enterprise-level database applications, which is the upstream of the company's cloud service business. This acquisition will help enhance the product competitiveness of the company's cloud service business. Apu Yang and Shenzhen are also developing and applying. NET framework to the rapid development of cloud native low code development tool DevMagic Studio, which is expected to become a domestic alternative to development tools such as Visual Studio. If it is recognized by the market, it is expected to supplement Xinchuang ecology and improve the voice of the industry at the same time.
Investment suggestion: based on the company's deep accumulation in x86 field and cooperation with domestic mainframe factories, combined with the good prosperity of Xinchuang in the industry, it is expected that there is room for further improvement in the sales volume and unit price of the company's firmware business in the future. From 2023 to 2025, the company is expected to achieve operating income of 4.09,5.58 and 717 million yuan respectively, and realize net profit of 0.99,1.43 and 223 million yuan respectively, corresponding to EPS of 1.13,1.64,2.56 yuan respectively. Cover for the first time, giving a "buy" rating.
Risk tips: product research and development is not as expected, market demand is not as expected, and market competition is intensified.