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Source: Capital Magazine
The Shenzhen Municipal Government held the “Shenzhen 5G Construction Mobilization Conference” in early September. The report indicates that it is expected that by the end of August next year, a total of 0.045 million 5G base stations will be built to achieve city-wide coverage of 5G networks; while telecom operators will also prioritize coverage of the top ten 5G key areas such as transportation, urban management, and electricity to cooperate with Shenzhen in industrial Internet, vehicle networking,Smart energyand projects such as smart factories are developing at an accelerated pace.
In order to catch the pace of 5G reform, in addition to requiring large-scale infrastructure support, a new round ofState-owned enterprise reformIt is also imperative. As cloud computing and big data become more mature, the digital transformation needs of enterprises will increase. It mainly provides (1) management software products, (2) cloud services, and (3) IoT solution services, and ranks among the top two in terms of competitiveness of domestic enterprise application softwareWave International(0596) In recent years, it has also actively accelerated its transformation to the cloud and launched cloud products such as PS Cloud to provide comprehensive cloud ERP solutions and services for large, medium, and micro enterprises (including: financial cloud, capital cloud, human resources cloud, procurement cloud, collaborative cloud, travel cloud, tax management cloud, marketing cloud, etc.). Under this wave of upgrades, it is bound to bring strong impetus to the business.
Cloud services revenue surged 104%
According to IDC's “China Enterprise Team Collaboration Software Market Tracking Report for the Second Half of 2018", “Inspur Cloud +” ranked in the top three in the Chinese enterprise team collaboration software SaaS model market. In the first half of 2019, Inspur International also continued to deepen major customer operations and signed contracts with China Forestry, Guangzhou Tap Water,China Railway Hi-Tech, Tianjin Energy,Nanshan Holdings,Zhongtong Express,BAICshares,Weichai Poweretc., which brought sales to a new high.
By the end of June 2019, the mid-term turnover reached 1.39 billion (HK$, same below), with a year-on-year increase of 24.7%. Among them, cloud services grew rapidly, with revenue of 0.16 billion, up 104.4% year on year; operating business recorded gross profit of 0.513 billion yuan, an increase of 25.7%. As the share of high-margin cloud service business revenue rose to 11.5%, it not only became a new revenue growth point, but also led to an increase in overall gross margin of 0.3% to 36.9%.
In addition to cloud services, the other two major businesses are also growing well. In terms of management software business, product advantages in the fields of financial sharing, intelligent manufacturing, enterprise big data, and network operation support systems (OSS) have been used to continuously promote digital transformation and management innovation for large enterprise customers, increasing segment revenue by 15.9% to 1.04 billion.
As for the IoT solutions business, it mainly covers the food industry and the communications industry, and recorded revenue of 0.187 billion, an increase of 37.2%. “Connection+Scenario” is a key future growth for the 5G communications industry. Wave is leading the way to further promote comprehensive cooperation with China Mobile IoT companies from data centers, platforms, data, and applications that carry IoT services. As more industries apply “connection+scenario” services in the 5G era, market demand is expected to become more urgent.
Acquire Inspur Tianyuan to pave the way for 5G popularity
Seeing this, Inspur International previously planned to acquire the remaining shares of Inspur Tianyuan Communications. After completion, Inspur Tianyuan will become a wholly-owned subsidiary of Inspur International. Inspur Tianyuan has now transformed into a supplier of industry management software and big data services. After receiving a 5G network license in the future, it will be able to use existing quantitative analysis tools and improved operational efficiency, and establish an IoT network service platform and cooperative ecosystem.
The acquisition is expected to further integrate the market and expand its existing customer network, and is expected to benefit from higher returns. As it cooperates more closely with Inspur Tianyuan, it will promote management software and SaaS services to its customers in the telecommunications, energy and transportation industries.
In terms of stock prices, there has been a rampant trend recently. After experiencing three peaks, there is support near the $3.5 neck line. STC also showed a buying signal in the oversold area, expecting $3.8 in the short term.