1. Cloud computing and digital transformation+independent brand business both increased, and the proportion continued to increase:
Looking at the full year: In 2023, the company achieved revenue of 119.624 billion yuan, up 3.23% year on year; realized net profit of 1,172 billion yuan, up 16.66% year on year; net profit after deducting non-return to mother was 1,263 billion yuan, up 37.22% year on year. The company's 23-year gross profit margin remained stable at 3.99%.
Looking at Q4 alone in Q4 2023, 2023Q4 achieved revenue of 35.469 billion yuan, a year-on-year increase of 13.03%; net profit to mother was 321 million yuan, a year-on-year decrease of 0.71%; net profit after deducting non-return to mother was 421 million yuan, an increase of 60.94% year-on-year.
By business: In 2023, the company's cloud computing and digital transformation business achieved revenue of 6.931 billion yuan, an increase of 37.98%; the own-brand business achieved revenue of 3.829 billion yuan, an increase of 48.95% year on year; IT distribution and value-added business achieved revenue of 108.853 billion yuan, which was basically the same as the previous year. The revenue structure of the strategic business continued to be optimized, and the two strategic businesses, cloud computing, digital transformation business, and independent brand business, accounted for 2.44pct of total revenue over the same period last year.
2. The “Digital Cloud Integration 2.0” strategy was upgraded to embrace AI. In 2023, the company's artificial intelligence product Jarvis was officially upgraded to a one-stop large-scale model integration and operation platform — the “Shenzhou Learning” platform product. Shenzhou Wenxue is both the enterprise's big model integration platform and the enterprise's big model operation platform, and has connected with dozens of mainstream big models; the company has officially launched the Shenzhen Artificial Intelligence Computing Center project and cooperated with world-class GPU vendors to build professional industry intelligence models and application solutions; the subsidiary Shenzhou Yunke became the largest shareholder of Shanshi Netke and carried out in-depth business cooperation. In the future, it will expand the breadth of application of the two products in the cloud computing, Xinchuang and cybersecurity markets.
3. Huawei's computing power partners focus on operators leading AI Xinchuang to increase the company's share in 2023. The subsidiary Shenzhou Kuntai products were shortlisted for China Mobile, China Unicom, and China Telecom procurement projects, successfully achieving comprehensive coverage of customers in the operator industry. Looking at this year, China Mobile previously announced the 2024 PC server product collection project. This time, it is expected that Arm servers may be dominated by Kunpeng. We believe that Shenzhou Digital's share as a partner partner in the Huawei whole machine server ecosystem is expected to increase further.
Profit forecasting and valuation analysis:
We adjusted our previous profit forecast, considering that the company's IT product distribution business revenue was basically flat compared to 22 years. The company's estimated revenue for 24-26 was 1270.22/1378.38/149.164 billion yuan (originally forecast 1372.73/149.329 billion yuan for 24-25); considering the increase in the company's high-margin cloud business share, the company's net profit to mother is estimated to be 14.24/17.19/2,108 billion yuan (the original forecast was 1,414/1,645 billion yuan for 24-25) to maintain the “buy” rating.
Risk warning: Domestic IT demand falls short of expectations, cloud computing business progress falls short of expectations, industry competition increases risk