Wangsu Technology released its report for the first quarter of 2024. On April 25, 2024, the company released its 2024 quarterly report. 24Q1 achieved operating income of 1.12 billion yuan, a year-on-year decrease of 4.1% and a decrease of 5.8%; realized net profit of 140 million yuan, an increase of 46.0% year-on-year and a decrease of 26.1% month-on-month; realized net profit deducted from non-mother of 100 million yuan, an increase of 183.5% year-on-year and a decrease of 13.6% month-on-month.
Q1 Achieved growth in performance, focusing on core business to develop overseas markets. 24Q1 has steadily implemented various tasks in accordance with the annual development plan. It continues to focus on the two core businesses of CDN, edge computing, and security, as well as the three independent businesses of computing power cloud, MSP, and data center liquid cooling solutions. It continues to deepen its advantageous fields and actively promote the layout and market development in key overseas regions. In the first quarter of 2024, the company achieved revenue of 1.12 billion yuan. Based on mature businesses such as CDN and IDC, the company is innovating in the direction of “security” and “edge computing”, promoting the establishment of a global edge computing platform and secure access edge, continuously improving platform capabilities; actively expanding new businesses with strong collaboration, the company has certain capabilities to accumulate, and has good market prospects.
Improve new business product capabilities and respond flexibly to market needs. The company continues to promote investment in the three separate business products and markets of computing power cloud, MSP, and liquid cooling solutions. The subsidiary Aijie Cloud flexibly adjusts its business according to market needs, aims to position itself as a computing power cloud, and provides customers with massive, polymorphic, stable and flexible computing power services in one stop. The company's subsidiary Green Cloud Map focuses on green energy saving, easy operation and maintenance, and cost saving data center liquid cooling technology solutions, and is actively promoting liquid cooling solutions to the market to create industry benchmark cases. It has now been used in cloud computing, integrated media, video rendering, universities, etc. Build a core team shareholding platform on the independent business subsidiary Cloudsway and Green Cloud Layer. In the practice of various business segments, the company continues to promote the construction of a serious and responsible corporate culture. With the product as the core, we focus on the performance, stability and quality of the product.
Create an “innovative solution for network hosting edge and security”. Based on edge computing and massive node resources, the company provides four major capabilities: edge cloud computing, global backbone network, global access acceleration, and security baseline to help overseas enterprises achieve a consistent global experience for users and offices. At the same time, the company continues to enrich overseas solutions for the industry and launched the “Short Drama Overseas Industry Solution”, which provides one-stop services such as upload, distribution, media processing, video playback, copyright protection, etc., to support the rapid launch of customers' overseas business, and further improve the service performance and usability of overseas platforms.
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 7.9/10.1/1.30 billion yuan in 24-26 years, corresponding to the closing price P/E 30/23/18x on April 25, 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.