The company reported revenue of 8.054 billion in the first three quarters of 2023, compared with the adjusted year-on-year data of-15.15%, net profit of-831 million, deduction of non-return net profit of-944 million, and year-on-year loss increased. The single Q3 income was 3.042 billion, compared with the adjusted data for the same period last year, the net profit was-198 million, the non-return net profit was-223 million, and the year-on-year loss increased.

Due to the macroeconomic impact, it is expected that the future side performance is expected to improve. We believe that the progress of the party and government innovation has temporarily affected the company's performance. It is expected that in the future, with the improvement of the economy, the party and government customer budget is expected to be repaired, and the company's PC terminal-related business is expected to improve.

Computing terminal business continues to improve quality and efficiency, the industry terminal is expected to gradually develop (1) network security and information business: the company strengthens the management of major projects, strengthens the construction of channel system, builds omni-directional product marketing plan, and strengthens service support capacity; in terms of industry terminal, a number of bank projects have won the bid, and the new products of Wenyin series have completed annual performance contracts with more than 30 secondary dealers across the country. (2) system equipment business: affected by the adjustment of relevant policies of system equipment business, market competition in related business sectors intensified, and the company continued to optimize business structure and aggregate business capabilities. promote the traditional business from the whole machine to sub-systems, system transformation and upgrading to achieve new breakthroughs, further optimize the allocation of resources, new orders for system equipment increased steadily in the first half of the year, and undertake / win a number of key research and development tasks Lay a solid foundation for future business development

China Electronics works with Huawei to create a "Pengteng" ecology, and the company is expected to benefit deeply in July. China Electronics and Huawei decided to merge Kunpeng Ecology and PKS Ecology to jointly create a "Pengteng" ecology that simultaneously supports Kunpeng and Feiteng processors. The merged "Pengteng" ecology will give full play to the respective advantages of China Electronics and Huawei. The two sides will carry out in-depth cooperation in industry standards, partnership programs, technology collaboration, open source contribution, marketing, personnel training and other aspects. The integration of the two ARM ecology is expected to accelerate the autonomous and controllable process of the whole industry chain from upstream manufacturing to downstream applications in China. As the core autonomous computing platform unit under the China Electronic system, the company is expected to get more support in upstream supply and downstream applications. It opens up room for long-term growth.

Profit forecast and valuation

The company's main business is the information equipment such as the server and pc of the party and government. As the party and government will enter a new normal of steady development in the future, we estimate that the company's revenue in 23-25 will be 165.05 and 19.30%, respectively (year-on-year + 17.66%, 19.30%, 16.18%, 16.18%), and the homing net profit will be 1.16%, 1.99, 274 million (- 3.16%, 71.06, 37.61%) respectively. The corresponding PE is 296.33 Universe 173.23 Universe 125.89, maintaining the "Buy" rating.

Risk hint

The risk of upstream supply chain, the risk of lower-than-expected risk caused by the policies and funds of downstream major customers, the risk of lower-than-expected release of downstream demand, the risk of international situation, the risk of intensified competition in the industry, and so on.