The company's 2023 results are in line with expectations. During the reporting period, the company continued to improve its technological innovation capabilities and R&D level, the core competitive advantage of self-developed products continued to increase, and the performance of the joint venture Haiguang Information maintained a high trend. We expect domestic computing power demand to remain high in 2024, maintaining a “highly recommended” investment rating.
The company released the 2023 performance report, and the performance was in line with expectations. In 2023, the company's revenue was 14.354 billion yuan, up 10.35% year on year; net profit to mother was 1,838 billion yuan, up 19.00% year on year; net profit after deduction was 1,271 billion yuan, up 10.43% year on year. During the reporting period, the company continued to improve technological innovation capabilities and R&D levels, enhance the core competitive advantage of products, continuously improve production and operation efficiency and profitability, and maintain steady growth in business performance. The company plans to accrue a total of 176 million yuan in asset impairment losses in 2023.
The company's revenue and net profit accelerated in the fourth quarter compared to the previous three quarters. The company's revenue for the fourth quarter was 6.596 billion yuan, up 17.34% year on year; net profit to mother was 1,088 million yuan, up 22.16% year on year; net profit after deduction was 861 million yuan, up 10.61% year on year, and revenue and profit accelerated from the previous three quarters.
Self-developed products enhance the company's profitability, and the advantages of liquid-cooled servers are highlighted. We believe that the increase in the proportion of the company's self-developed products is the main factor in increasing the company's profitability. In 2023, the company continued to develop high-end computers based on domestic processors, IO modules, and built-in active control firmware. Related fund-raising projects progressed smoothly, continued to improve product performance in terms of component performance management, product stability, high-speed interconnection, etc., and comprehensively upgraded the expandability and manageability of the server. In addition, the company's holding company Shuguang Shuchuang has a leading edge in the domestic field of immersion phase change liquid cooling, and Zhongke Shuguang liquid cooling servers lead the domestic market share.
The performance of the joint venture Haiguang Information is growing rapidly, and demand for domestic computing power is strong. According to the performance report issued by Haiguang Information, Haiguang Information's revenue in 2023 was 6.012 billion yuan, up 17.30% year on year; net profit to mother was 1,262 billion yuan, up 57.11% year on year; net profit after deduction was 1,136 billion yuan, up 51.73% year on year.
We believe that the high growth in Haiguang Information's performance confirms the strong demand for domestic computing power. We expect domestic computing power to remain strong in 2024.
Maintain a “Highly Recommended” investment rating. We expect the company to achieve operating income of 143.54, 173.11, and 21.068 billion yuan respectively from 23 to 25, and net profit to mother of 18.38 billion yuan, 24.06 billion yuan, and 3,096 billion yuan respectively. The corresponding PE is 36.5, 27.9, and 21.7 times, respectively, maintaining a “highly recommended” investment rating.
Risk warning: Supply chain risks and the risk that macroeconomics will affect the growth rate of new infrastructure decline.