Core views

The company released a report for the first quarter of 2024, achieving revenue of 1,425 million yuan, net profit of 60 million yuan, and net profit of 56 million yuan after deduction of non-return to mother. The company is a core enterprise under the Shanghai State-owned Assets Administration Commission. Its business covers sectors such as data elements, intelligent computing power, cloud services, etc., and is expected to fully benefit from the broad market space brought by the development of the AI and data factor industries. Against the backdrop of high demand for domestic computing power, the company has the core resources of the Songjiang Intelligent Computing Center and is expected to fully benefit; the company's subsidiary represents the Microsoft Cloud Service business, which is highly scarce domestically, and is expected to achieve rapid cloud service business growth through Microsoft Cloud Service+AI market expansion; the company is an important technology listing platform under the Shanghai State-owned Assets Administration Commission, and has experience in data element operation and governance. It is expected that the Shanghai Big Data Platform will participate deeply in the construction of data elements and key services in Shanghai and other regions with the company's shareholders' background and industry service experience Data operation and data governance section. According to the company's results for the first quarter of 2023 and 2024, we adjusted the 2024-2025 profit forecast and added the 2026 forecast. The estimated revenue is 60.01/67.96/7.626 billion yuan respectively, up 14.00%/13.26%/12.21% year on year, and net profit to mother is 2.20/250/292 million yuan, up 13.88%, 13.86% year-on-year respectively, corresponding to PE79/69/59 times, maintaining the “buy” rating.

occurrences

On April 27, Yunsai Zhilian released its report for the first quarter of 2024. In the first quarter of 2024, the company achieved revenue of 1,425 billion yuan, an increase of 28.66% over the previous year; realized net profit of 60 million yuan, an increase of 44.04% over the previous year; and realized net profit of 56 million yuan without return to mother, an increase of 82.83% over the previous year. Previously, the company released its 2023 annual report, achieving revenue of 5.264 billion yuan, net profit of 193 million yuan to mother, and deducting 122 million yuan of non-net profit.

Brief review

The company has excellent performance and improved operating efficiency. The company performed well in the first quarter, and the profit side growth rate was higher than the revenue growth rate. The company actively promotes the implementation of project intelligence centers and data element businesses, while strengthening corporate governance to improve operational efficiency. The company's sales, management, and R&D expenses in the first quarter were 4.07%, 4.11%, and 6.89%, respectively, down 1.44, 1.81, and 0.93 percentage points from the previous year, improving quality and efficiency significantly.

Demand for domestic computing power is strong. The company takes a stake in the Shanghai Computing Power Core Platform and also has high-quality resources from the Songjiang Intelligent Computing Center, which is expected to fully benefit. Currently, all regions of the country are actively promoting the construction of intelligent computing power and introducing various plans and subsidy measures to promote related investments. Shanghai's relevant documents clearly state that in 2025, the scale of intelligent computing in Shanghai will exceed 30 EFLOPS, and that the transformation of existing data centers will be promoted through financial support methods such as special subsidies and interest-rate loans.

The company has a good layout in the data center field. The second phase of the Songjiang Big Data Computing Center, which will be launched in 2023, will serve the construction of the Shanghai Intelligent Computing Cluster and provide services such as intelligent computing hosting, operation and maintenance. In addition, the company co-funded the establishment of Shanghai Intelligent Computing Technology Co., Ltd. with its parent company and other partners. The company will become the core platform for the construction and operation of intelligent computing power in Shanghai. Yunsaizhi holds 11% of the shares and is expected to participate deeply in the intelligent computing business and further enhance its IDC business competitiveness.

The wholly-owned subsidiary has multiple Microsoft certifications, and the cloud service business is expected to benefit from Microsoft's business expansion. The company's subsidiaries Nanyang Wanbang and Cigna Times are Microsoft's gold partner. They have the highest level of service provider certifications such as AEMSP and AIASP. Their related technology and business strength have been recognized by Microsoft, and are scarce in China. As Microsoft and OpenAI continue to deepen and expand their business in the AI field, the two major partners are expected to rely on Azure cloud services to achieve AI capability output, thereby contributing to the stable performance of the parent company Yunsai Zhilian.

The data element business has the advantage of card slots, and the company is expected to participate deeply in data operation and data governance to help the development of the data element industry in Shanghai.

The company is the core digital economy platform under the Shanghai State-owned Assets Administration Commission. It is committed to the construction of smart city data centers, etc., and has accumulated relevant team and project experience in government affairs and industry big data applications. The company has the ability to “full-chain service” for digital transformation. As the general integrator, operator and operator of the Shanghai Big Data Center resource platform, and the general operator of the data operation platform, it has won numerous bids for Shanghai Big Data Center operation service projects. The company has a state-owned background, relies on the power of the parent company, and also has the ability to support products and services in the entire data element industry chain. It is expected to benefit deeply from the promotion of data element policies and ecological cultivation, contribute its strength to the construction of data factor markets in Shanghai and other places, and seize broad market space.

Investment proposal: The company is a core enterprise under the Shanghai State-owned Assets Administration Commission. Its business covers sectors such as data elements, intelligent computing power, and cloud services, and is expected to fully benefit from the broad market space brought by the development of the AI and data factor industries. Against the backdrop of high demand for domestic computing power, the company has the core resources of the Songjiang Intelligent Computing Center and is expected to fully benefit; the company's subsidiary represents the Microsoft Cloud Service business, which is highly scarce domestically, and is expected to achieve rapid cloud service business growth through Microsoft Cloud Service+AI market expansion; the company is an important technology listing platform under the Shanghai State-owned Assets Administration Commission, and has experience in data element operation and governance. It is expected that it will participate deeply in the construction of data elements in Shanghai and other regions with the company's shareholders' background and industry service experience. Service data operation and data governance sections. According to the company's results for the first quarter of 2023 and 2024, we adjusted the 2024-2025 profit forecast and added the 2026 forecast. The estimated revenue is 60.01/67.96/7.626 billion yuan respectively, up 14.00%/13.26%/12.21% year on year, and net profit to mother is 2.20/250/292 million yuan, up 13.88%, 13.86%, and 16.86% year-on-year respectively, corresponding to PE79/69/59 times, maintaining the “buy” rating.

Risk analysis

1) Policy development falls short of expectations: The company's data element sector is the main business and is greatly affected by strong policy support. If the introduction of data elements at the national and local levels falls short of expectations, the growth rate of the company's cloud service business segments such as big data may slow down. 2) Supply chain risk: There is currently a shortage of chip supply. If chips do not arrive at the specified time, it may affect the progress of the company's computing power center construction. If the chip arrives later than expected, the construction of the computing power center falls short of expectations, and the market's confidence in expanding the company's new computing power rental business declines. 3) Increased market competition: Businesses related to data elements have certain project-based attributes, and there is a risk of price pressure due to competitive pressure, which in turn causes the company's net interest rate to decline and performance fluctuations. If competition in the big data cloud service industry related to data elements intensifies, the tender price of the company's orders falls, triggering a decline in the company's overall business gross margin. 4) The development of the data element industry falls short of expectations: The company lays out the data processing field in the data element industry to benefit from the development of the data element industry. Currently, policies related to data elements need to be improved urgently. There is no definitive large-scale business model in terms of authorization, circulation, etc., and the development of related businesses is greatly affected by policies and the willingness of data suppliers and demand parties to participate.