On November 21, 2023, Guangdong Province issued the “Three-Year Action Plan for the Construction of the “Digital Bay Area”, which proposes to build a unified market for data elements, promote the establishment of unified data asset registration rules in the Greater Bay Area, explore authorized public data operations, and support Guangzhou and Shenzhen data exchanges to establish national data exchanges. With the gradual implementation of early conceptual applications such as data assets and data transactions, the market surrounding digital infrastructure is expected to drive a new round of investment opportunities. As one of the core participants in Guangzhou's digital infrastructure, Radio and Television Communications has a layout in terms of data, computing power, algorithms, scenarios, etc., and is expected to gain market opportunities with its first-mover advantage and ecological construction in this field. It is recommended to pay attention to the progress of data transactions and the company's continued development in this field.

Guangdong Province issued the “Three-Year Action Plan for the Construction of the “Digital Bay Area” to support the Guangzhou and Shenzhen data exchanges to establish national data exchanges. The “Plan” proposes to build a unified market for data elements, promote the establishment of unified data asset registration rules in the Greater Bay Area, explore the authorized operation of public data, and realize the integrated application of public data and social data. The “Plan” proposes to support commercial banks that meet relevant qualification conditions to carry out pilot projects for cross-border internal data flows, and rely on platforms such as the Guangzhou National Supercomputing Center to help enterprises and scientific research institutions in the Greater Bay Area improve the efficiency of computing power usage and original algorithm iteration. The “Plan” supports Guangzhou and Shenzhen data exchanges to establish national data exchanges and build a data element trading market in the Greater Bay Area with unified market systems, trading rules, and platform carriers. We believe that the “Plan” sets clear goals and development pace, and that the relevant layout is expected to drive the circulation of regional data elements ahead of time and gradually move towards the whole country. According to Radio and Television Express's announcement, the company holds 10.5% of the shares in the Guangzhou Data Exchange and is expected to benefit from the development of the data trading market in the future.

Radio and Television Express actively lays out the data element market, empowering “data, computing power, algorithms, and scenarios” in various aspects.

On November 21, 2023, according to the company announcement, Radio and Television Express became the first transaction candidate for the “Guangzhou Data Group Artificial Intelligence Public Computing Center Construction Project Equipment and Supporting Services Procurement Project”, with a maximum purchase price of 485 million yuan. The Guangzhou Artificial Intelligence Public Computing Center is one of the important digital infrastructures in the field of artificial intelligence in Guangzhou. It focuses on the “Guangzhou Artificial Intelligence Public Computing Power Center”, the “Public Computing Power Service Platform, Application Innovation Incubation Platform, Industrial Integration Empowerment Platform, Science and Technology Collaborative Innovation Platform, and Talent Training Platform” to support the construction of Guangzhou's artificial intelligence ecosystem and accelerate the development of the digital economy. Radio and Television Express actively lays out the data element market and provides solutions in terms of data, computing power, algorithms, and scenarios. The company successfully obtained the first transaction candidate for the procurement project of Guangzhou Data Group, helping the development of the digital economy.

Risk factors: risk of declining demand due to macroeconomic pressure; risk of financial innovation demand and progress falling short of expectations; risk of geopolitical factors causing overseas revenue to fall short of expectations; risk of digital yuan promotion falling short of expectations; risk of falling short of expectations in data transactions, etc.

Profit forecasting, valuation and rating: At the industry level, the goals of the “Plan” are clear and clear. We believe that the relevant layout is expected to drive the first circulation of regional data elements and gradually move towards the whole country; at the company level, Radio and Television Express actively lays out the data element market, which is expected to fully benefit from the development of the digital economy with its technical strength, first-mover advantage, and ecological construction. We are optimistic about the company's long-term layout in the fields of computing power and data trading. We recommend paying attention to the pace of implementation of data trading applications and the status of business orders for the company. We maintain the company's 2023-2025 EPS forecast of 0.40/0.45/0.49 yuan, which corresponds to 31/28/26 times PE at the current price. Referring to the current prices of comparable companies Changliang Technology and Yuxin Technology corresponding to an average of 47 times PE in 2023 (all using the forecasts of the CITIC Securities Research Department), considering the dilution of the company's minority shareholders' profits to profits, we gave Radio and Television Express 40 times PE in 2023, maintaining the target price of 16 yuan, and maintaining the “buy” rating.