The quality of revenue has been growing steadily. The company's performance remained positive in the first three quarters, and the annual performance is expected to improve marginally.

In terms of profitability, the company achieved revenue of 660 million yuan (down 1.08% year on year) in Q1-Q3 in '23, net profit of 91 million yuan (+40.39% year-on-year), and net profit after deducting net profit of $67 million (+101.67% year-on-year), mainly due to changes in the fair value of various financial assets and the increase in disposal profit losses compared to the same period last year, and the reduction in deferred income tax expenses due to the company's confirmation of deferred income tax assets based on future profit conditions. Looking at the single quarter of Q3 in '23, revenue reached 232 million yuan (+1.72% year over year), net profit from net income reached 26 million yuan (down 5.65% year on year), and net profit after deducting net profit reached 0.2 billion yuan (+143% year on year), achieving high growth. Overall, the company has excellent cost management and control, grasps digital transformation and development opportunities. Relying on the technical advantages, service advantages, operational advantages and brand advantages accumulated over the years, customer stickiness is expected to increase, and performance is expected to maintain a high growth rate.

Seize the digital opportunities of cloud network integration and promote the three-dimensional blueprint of “cloud network, cloud communication, and metaverse”.

The company is advancing the three business blueprints of “cloud networks, cloud communications, and metaverse” in an orderly manner. In the field of cloud communication business, the company uses cloud video as its core new driving force. Based on the original WEBRTC technology, it has focused on various technical difficulties such as weak network confrontation, 4K UHD, cloud streaming distribution of OFFICE documents, hybrid cloud architecture, and ultra-low latency players, etc., and has made breakthrough progress, and has developed a large number of self-developed technologies.

Furthermore, under the general trend of deepening implementation of the national ICT industry strategy, the company has fully integrated the corporate office ecosystem to better support the number of large-scale users of ICT customers, mainly central enterprises, and e-mail office applications with massive data. In terms of cloud network business, the company has established a business strategic direction centered on cloud network interconnection. Two four-star IDC computer rooms were built in Beijing and Shanghai to provide customers with cabinet hosting services, virtual cloud hosting, and supporting perimeter security services. The company's IDC computer room meets domestic and foreign data storage and IT cloud computing needs, and has formed a good reputation. Customer stickiness is strong. Some customers have signed contracts for more than 10 years. In the future, industry customers will gradually expand from traditional manufacturing to finance and other industries. The company cooperates with China Unicom Group in the mobile resale business, with the “263 Cloud Card” as the main product to serve corporate customers and individual customers in various industries. In terms of the metaverse, the company is based on accumulated resources and technology extension in global network resources, real-time audio and video transmission, algorithms and computing power, etc., based on the underlying technical architecture and RTN capabilities of the 263 metaverse, combined with artificial intelligence technology such as AIGC, to create service-oriented digital people for enterprises based on real people driving and AI intelligence. Overall, the company has established a good brand and market influence through technology accumulation in the fields of cloud computing, big data, intelligent connectivity, and information security.

Maintaining high investment in technology research and development to enhance core competitiveness, the ability to integrate cloud network resources continues to be highlighted. The company attaches great importance to technology research and development, deeply lays out the field of cross-border data communication services, assists enterprises in digital transformation, and empowers enterprises to develop globally. The company has deep cooperation with domestic and foreign telecom infrastructure operators and international operators to provide professional, stable and efficient cross-border data communication services for domestic and foreign users, and has strong ability to integrate cloud network resources. We are optimistic about the company's future growth. Based on the company's latest performance, we gave the company a net profit forecast of 114 million yuan, 121 million yuan, and 130 million yuan for 2023-2025, corresponding EPS of 0.08 yuan, 0.09 yuan, 0.09 yuan, and corresponding PE of 57.79 times, 54.30 times, and 50.61 times, giving it a “careful recommendation” rating.

Risk warning: the risk of exchange rate fluctuations; the risk of management control under group management; the risk of technological innovation brought about by technological development.