Net profit increased 47% in 2023. The company achieved revenue of 4.35 billion yuan in 2023, a year-on-year increase of 60.3%; realized net profit of 1.76 billion yuan, an increase of 47.0% over the previous year; realized net profit without deduction of 17.01 billion yuan, an increase of 50.2% over the previous year. Looking at the fourth quarter of a single quarter, the company achieved operating income of 1.67 billion yuan, an increase of 130.2% over the previous year; realized net profit of 69.9% to mother. Net operating cash flow was affected by AIDC's business equipment purchase expenses, which decreased by 30.4% year-on-year to $1,244 billion. Overall, the company's net profit to mother is within the previous performance forecast range and achieved rapid growth in 2023.
By business, the IDC business achieved revenue of 3.15 billion yuan, an increase of 16.1% over the previous year; the AIDC business achieved revenue of 1.20 billion yuan. By region, the East China region's business contributed revenue and achieved revenue of 1.01 billion yuan in 2023. The layout of Langfang outside the region is gradually progressing.
Changes in revenue structure affect profitability. In 2023, the company achieved a gross margin level of 48.6%, a year-on-year decrease of 4.5 pct, a net interest rate of 40.4%, and a year-on-year decrease of 3.7 pct. The decline in profitability was mainly due to the impact of the revenue structure. The AIDC business added equipment purchase costs, with a gross margin of about 33.1%, which is lower than the company average; the gross margin of the IDC business was 54.5%, an increase of 1.35 pcts over the previous year.
Forward-looking layout of liquid cooling and intelligent computing services to actively promote the AIDC layout. In terms of liquid cooling business, the company took the lead in delivering the industry's first liquid cooling intelligent computing center; in terms of intelligent computing services, the company took the lead in deploying large-scale computing power modules in the Beijing-Tianjin-Hebei Park and Yangtze River Delta Park in 2023. At the same time, it is planned to build Langfang Area B as a standalone intelligent computing center project that can gather more than 100,000 cards to provide service support for trillion-dollar model training and reasoning.
Actively give back dividends to shareholders. The company implemented an interim cash dividend in 2023, with a cash dividend of 3.90 yuan (tax included) for every 10 shares, for a total of 670 million yuan in cash dividends. The board of directors proposed to further distribute the 2023 annual cash dividend, with a cash dividend of 1.27 yuan (tax included) for every 10 shares, for a total cash dividend of 220 million yuan, and requested the shareholders' meeting to authorize the board of directors to formulate a 2024 mid-term cash dividend plan of no more than 70 million yuan.
Risk warning: AIDC's development falls short of expectations, data center construction and listing progress falls short of expectations, and industry competition intensifies.
Investment advice: maintain profit forecasts and maintain “gain” ratings
Maintaining the company's 2024-2025 profit forecast and adding the 2026 profit forecast, the company's net profit for 2024-2026 is estimated to be 23.2/3.47/4.0 billion yuan, respectively. The PE corresponding to the current stock price is 22/15/13x, respectively, and the corresponding EV/EBITDA is 21/15/13x, respectively. The delivery of the company's traditional IDC projects is progressing steadily, and the AIDC business is expanding smoothly. It is optimistic about development potential and maintains an “gain” rating.