Strengthen the operation of Shengteng's computing power and expand the ecological scenario. Since 2020, the company has deployed capabilities related to computing power operations. Currently, it has implemented related work in Xi'an, Suzhou and other places, and is the only operating service provider for the Xi'an Future Artificial Intelligence Computing Center. The AIGC model factory and a variety of AIGC all-in-one computers were released to open up the last kilometer from the computing power hub to the scene landing.
A deep participant in the Hongmeng and open source Hongmeng ecosystem, providing full-stack solutions for OS, software and hardware, platforms, and intelligent applications. The Huawei Hongmeng single-framework system will be implemented, more and more top applications will launch Hongmeng development and adaptation, and the million-level northbound software migration will bring business growth to the company. In terms of Southbound Ecology, the company has completed access to more than 200 equipment manufacturers; in terms of open source Hongmeng, it has joined hands with leading equipment manufacturers and ecological partners in the industry to launch industrial tablets, industrial central control screens, drones, robots, etc.
Build smart car solutions and continue to expand the customer base. The company formed a “consulting+tools+professional services (related to intelligent driving, smart cockpit, etc.) +digital marketing” solution to gradually promote open source Hongmeng cockpit deployment and promote autonomous and controllable domestic vehicle operating system products and technology upgrades. As of November '23, it has served nearly 30 domestic smart car companies.
Pan-ERP business enables large enterprises to digitally transform the cloud. The successful implementation of Huawei-developed MetaERP is expected to break the overseas monopoly situation in the high-end ERP market. The company's pan-ERP innovation business is driven by industry consulting, implemented with pan-ERP implementation, and established end-to-end consulting and implementation service capabilities.
Profit forecasting and investment advice. The company is building on AI, Hongmeng, ERP and other business capabilities to broaden the scope of customers and reduce costs and increase efficiency. It is expected that in 23 years, revenue will be under short-term pressure, gross margin and expense ratio will improve, and profits will improve; revenue will return to double digits in 24-25, and profits will continue to rise. The estimated net profit for 23-24 will be 819/1,018 million yuan, and the latest stock price corresponding to the 23-24 PE will be 19.6/15.7 times. Huawei's various business trends are improving. The company is deeply embedded in the Huawei ecosystem and has growth prospects. Referring to comparable company valuations, combined with the liquidity of Hong Kong stocks, a PE valuation of 20 times over 24 years was given, and a reasonable value of HK$7.61 per share was obtained. Maintain a “buy” rating.
Risk warning. The computing power industry chain may be affected by policy changes or insufficient production capacity, etc.