Performance performance

On April 17, 2024, the company released its 2023 annual report

[Overall performance]

(1) Revenue of $56.284 billion (+10.25%) for 23 years, net profit to mother of 330 million yuan (+308.10%), net profit not attributable to mother of 685.83 million yuan (+125.68%).

(2) 23Q4 revenue was 17.612 billion yuan, down 1.66% year on year, net profit to mother was 599 million yuan, up 55.58% year on year, and net profit excluding non-return to mother was 408 million yuan, up 26.91% year on year.

[View by industry]

Revenue from software development business in '23 was 2,215 billion (-16.25%), and revenue from industrial services was 54.069 billion yuan (+11.70%).

[View by product]

Revenue from digital and information services in '23 billion yuan (-16.25%), revenue from engineering services for high-tech industries of 51,757 billion yuan (+13.10%), revenue from digital heating and new energy services of 1,974 billion yuan (-0.89%), revenue from other industry services of 338 million yuan (-48.28%)

[View by region]

Domestic revenue in '23 was $55.366 billion (+9.4%), and overseas revenue was 918 million yuan (+107.18%).

[Gross profit margin, cash flow]

The gross profit margin for 23 was 11.28%, a year-on-year decrease of 0.13pct; the 23Q4 gross profit margin was 52.91%, and a year-on-year decrease of 5.4pct;

Net cash flow from operating activities in '23 was 655 million yuan (+70.74%), and net cash flow from operating activities in 23Q4 was 599 million yuan, a year-on-year decrease of 57.82%.

[Fee rate]

In 23, the sales/management/R&D expense ratio was 1.71%/3.08%/3.26%, the sales expense ratio decreased by 0.08 pct year on year, the management cost ratio decreased by 0.48 pct year on year, and the R&D cost ratio increased by 0.27 pct year on year.

23Q4 sales/management/R&D expense ratio 1.48%/2.70% /3.20, sales expense ratio increased 0.06 pct year over year, management cost ratio decreased 1.12 pct year over year, and R&D cost ratio increased 0.31 pct year over year.

Note: Yoy's year-on-year growth rate for the above quarter

Performance reviews

Revenue grew steadily throughout the year, and the profit growth rate was impressive

The company achieved revenue of $56.284 billion (+10.25%), net profit to mother of 330 million yuan (+308.10%), and net profit without return to mother of 685.83 million yuan (+125.68%). Looking at Q4 alone, the company achieved revenue of 17.612 billion yuan, a year-on-year decrease of 1.66%, net profit to mother of 599 million yuan, an increase of 55.58% year-on-year, and net profit after deducting non-return to mother of 408 million yuan, an increase of 26.91% year-on-year.

With the country successively introducing a series of important policies such as the “Digital China Construction Overall Layout Plan”, “High-Quality Computing Infrastructure Development Action Plan”, and the “Data Elements ×” Three-Year Action Plan (2024-2026), China's digital economy has entered a new stage. Shenzhen Sanda is a builder and operator of digital infrastructure and data resource systems. Its “China Electronic Cloud” relies on China's electronic autonomous computing system, guided by market demand to provide digital solutions for the Party, government, military, energy, finance, education, medical care, manufacturing, etc. It is expected that it will continue to make a strong contribution to revenue and profit in the future.

Adhere to cloud data integration, develop a variety of data element products, actively help data element industry companies adhere to the “cloud data integration” concept, meet the needs of industries such as integrated government big data construction, data asset registration forms, data asset registration transactions, etc., independently developed and formed a series of self-developed products such as data resource platforms, data asset registration platforms, data operation service platforms, data trading platforms, etc., and began exploring public data licensing operations with several cities, and providing various data services for state-owned central enterprises. The products and services cover both sides of data resource system construction and data operation.

In the field of public data, the company has built public data resource centers for local governments in Shenzhen, Hunan, Sichuan, Nanyang, Guangzhou and Zengcheng, etc., to achieve a “data empowerment and collaborative intellectual governance” digital government model. It has sorted out more than 1 million catalogues and gathered more than 400 billion pieces of data to help local governments serve more than 10 million business entities and more than 100 million individual entities.

At the same time, the company actively participated in the authorized operation of public data in various regions. Since the establishment of the National Data Bureau, the company has signed data operation cooperation agreements with Hebei Province, Shijiazhuang, Dalian, Tangshan, Shenyang, Changchun and other cities to participate in the design of products such as “Oyster Insurance” and “Wedding Letter” to achieve value discovery and value-added preservation of public data assets.

Lay out intelligent computing centers, lay out AI throughout the industry chain

The company formulated the “1+N+M” trusted intelligent computing strategy, which is to develop a set of trusted intelligent computing platform products, build N trusted intelligent computing centers, develop M industry models based on industry scenarios, and promote the implementation of artificial intelligence technology in the industry. The company is actively promoting the “1+N+M” strategy and has achieved phased results. Currently, the company is actively deploying intelligent computing centers, building the application of artificial intelligence in vertical industries, and building an intelligent computing ecosystem alliance. In the future, it is expected that AI will be deployed throughout the chain to have a synergy effect with the company's cloud data business.

Profit forecasting and valuation

We forecast that the company will achieve revenue of 630.02/712.76/81,524 billion yuan in 2024-2026, with year-on-year growth rates of 11.94%/13.13%/14.38%, corresponding net profit of 4.25/5.28/670 billion yuan respectively, corresponding 24/25/26 year-on-year growth rates of 28.87%/24.22%/27.04%, corresponding EPS 0.37/0.46/0.59 yuan, corresponding PE 44.01/35.43/27.89 times. Maintain an “Overweight” rating.

Risk warning

Macro environmental risks, risks that policy implementation falls short of expectations, and R&D investment affect the company's overall operating performance.