Performance grew steadily in 2023. Companies with excellent performance in the first quarter of 2024 released their 2023 annual reports. In 2023, they achieved revenue of 3,529 billion yuan, up 20.72% year on year; realized net profit of 344 million yuan, up 22.74% year on year; net profit after deducted from back to mother was 316 million yuan, up 24.25% year on year; basic earnings per share were 0.61 yuan/share, up 22.00% year on year. Affected by the implementation of the company's 2022 equity incentive plan, the company's share payment expenses during the reporting period were 659.291 million yuan, and the impact on net profit attributable to shareholders of listed companies was 56.0398 million yuan. The overall gross profit margin of the company's business in 2023 was 32.35%, up 8.51pct from the previous year, a significant increase compared with the previous year. It is a combination of positive factors such as changes in the company's product sales mix, cost reduction and efficiency, and commodity price fluctuations.
The company released its report for the first quarter of 2024, achieving revenue of 746 million yuan, a year-on-year increase of 41.36%; net profit to mother of 61.9752 million yuan, an increase of 146.93%; net profit after deducting 54.3077 million yuan, an increase of 169.65%; and basic earnings per share of 0.11 yuan, an increase of 175% year-on-year.
Technological innovation leads industry trends. The advantages of full-chain solutions highlight that the company is a national high-tech enterprise, a member unit of the China Engineering Construction Standardization Association Data Center Working Group, a member unit of the China Communications Standardization Association, and a member unit of the China Refrigeration Association. It actively participates in the preparation and compilation of relevant standards and white papers. In the data center sector, the company's customers cover large-scale data center cooling systems and products from users such as Tencent, Alibaba, Qinhuai Data, Wanguo Data, China Mobile, China Telecom, and China Unicom. The company has launched Coolinside liquid cooling cabinets and full-chain liquid cooling solutions for computing power equipment and data centers. The products include cooling sources, pipeline connections, CDU distribution, quick-change joints, Manifold, cold plates, long-term liquid cooling materials, liquid leak detection, etc.
The share of revenue of computer room temperature control and energy-saving equipment has increased. According to the 2023 annual report of the Digital Wave Company, the operating revenue of the computer room temperature control and energy-saving equipment business reached 1,640 billion yuan, accounting for 46.48% of total revenue, exceeding the revenue share of cabinet temperature control and energy-saving products, indicating that the company's revenue structure has changed. The company has firmly grasped the digital wave and has become an important supplier in the data center temperature control industry. At the same time, the company's energy storage business grew steadily, with a year-on-year increase of about 44% over the previous year.
Investment advice
We are optimistic about the company's 2024 data center liquid cooling and charging pile business, and slightly adjust the company's profit forecast. The revised forecast is: 2024-2026 operating income is 47.24/61.94/7.885 billion yuan (2024-2025 pre-year value was 58.02/7.986 billion yuan); 2023-2025 forecast net profit to mother is 5.27/693/886 million yuan, respectively (value before 2024-2025 was 570.806 million yuan); corresponding to 2023-2025 EPS is 0.93/1.22/1.56 yuan. The PE corresponding to the company's current stock price is 36/28/22 times, maintaining a “buy” investment rating.
Risk warning
1) Breakthroughs in technology research and development fall short of expectations; 2) downstream demand falls short of expectations; 3) loss of core technical personnel; 4) large fluctuations in raw material costs affect gross profit margin; 5) Market competition increases the risk of affecting gross margin.