Wangsu Technology announced its 2023 results. In 2023, the company achieved revenue of 4.7 billion yuan, a year-on-year decrease of 7.5%; achieved net profit of 610 million yuan, a year-on-year increase of 221.7%; and realized deducted non-net profit of 410 million yuan, an increase of 132.1% year-on-year. Looking at a single quarter, 4Q23 achieved revenue of 1.2 billion yuan, down 11.8% year on year; realized net profit of 190 million yuan, up 1124.9% year on year, up 11.9% month on month; realized deducted non-net profit of 110 million yuan, up 267.7% year on year, up 5.2% month on month.
“Domestic+Overseas” market linkage to steadily promote overseas business development. In 2023, the company achieved overseas revenue of 214 million yuan, an increase of 12.84% over the previous year. Overseas revenue accounted for 45.52% of the company's overall revenue. In 2023, the company will continue to expand overseas, build high-quality networks and services, and further improve the service performance and usability of overseas platforms; in addition, it will further strengthen domestic and overseas business linkages to promote security and MSP services overseas. Since 2010, the company has accompanied customers overseas. After more than ten years of development, through self-built overseas platforms and mergers and acquisitions, the company has built a strong global resource service system to support customers in expanding their global business. The company's overseas service capabilities and service level are well recognized by customers.
Promote edge computing practices for more scenarios. In 2023, the company continued to invest resources to build an edge computing platform, continuously polish the edge computing technology base, and promote edge computing practices for more scenarios. In response to market demand, Netsu Edge Application launched a distributed, lightweight storage technology service - Edge KV. The product uses a highly usable design concept to replicate and synchronize data between multiple edge nodes to ensure data reliability and fault tolerance. It is suitable for business scenarios such as page customization services, API gateway services, and content synchronization services. At present, the company has launched a variety of edge computing products, such as edge cloud hosting, edge cloud containers, edge storage, edge applications, edge intelligence platform ECC Life, etc., and continues to improve resources, performance and service capabilities.
The influence of “Internet Lodging Safety” continues to expand. In 2023, the company focused on building a security system and continuing to promote the construction of the “3+X+AI” SASE system. By opening up the three capabilities of network, security, and edge computing, combining the security capabilities of partners, and integrating AI capabilities into all aspects of security defense, the company also built an intelligent security protection system from edge to cloud for overseas enterprise customers based on the company's overseas CDN resource platform and security capability base, to help enterprises quickly build overseas business and accelerate business implementation.
Investment advice: We are optimistic about the company's competitiveness in overseas markets and the potential of domestic short video giants to go overseas. At the same time, we believe that the company's CDN nodes are gradually achieving a global layout and have edge GPU computing capabilities. The company is expected to achieve net profit of 6.5/76/ 9.3 billion yuan in 24-26 years, corresponding to the closing price P/E 33/28/23x on April 15, 2024, maintaining the “recommended” rating.
Risk warning: The implementation of edge computing technology fell short of expectations, short videos fell short of expectations, and the competitive landscape of the CDN industry deteriorated.