Event: Co-Creation Data released its 2024 quarterly report. 24Q1 achieved operating income of 1,759 million yuan, +118.38% year over year; realized net profit of 162 million yuan, +253.42% year over year.
Various businesses have grown across the board, and server remanufacturing has generated large-scale revenue. 1) Data storage:
The price of storage products has been on an upward trend since 2023Q3, leading to a year-on-year increase in the company's storage revenue and net interest rate levels. At the same time, the company continues to improve its product matrix, actively expand downstream end customers and sales channels, and promote continuous growth in performance. 2) AIOT terminals: Demand for smart homes, smart wearables, and smart security categories is improving, the company's hardware sales have increased, and the share of overseas smart security business has increased. The smart coffee machine, a Xintuo product in the Big Health category, has achieved mass production and sales, contributing to the company's overall sales and profit situation. 3) Cloud service: The company's V-SaaS video cloud continues to advance, the number of users has increased significantly, and the ARPU value has steadily increased; at the same time, the company relies on its own server remanufacturing business to lay out a wider range of cloud platform fields, and customer expansion is progressing steadily. 4) Server remanufacturing: Production capacity continues to climb, and large-scale revenue has been generated. At the same time, computing power server remanufacturing is beginning to take shape, and is expected to have a good synergy effect with the company's cloud services. Benefiting from increased storage prices, a high increase in overseas security and cloud service revenue, and server remanufacturing volume, the company's overall 24Q1 gross margin increased by 3.23pct year-on-year to 16.33%. In terms of cost ratio, due to the scale effect brought about by rapid revenue growth, 24Q1 company's sales/management/R&D expense ratio decreased by 0.11/0.27/0.32pct, respectively.
Demand for computing power continues to rise, and the server remanufacturing business clearly benefits. Under the global wave of computing power infrastructure, AI server shipments continued to increase, and demand for server remanufacturing increased accordingly. According to Marketsand Markets, the IT asset disposal market is expected to grow from US$18.4 billion in 2024 to US$26.6 billion in 2029, with a compound growth rate of 7.6%. Overseas recycling of servers requires multiple qualifications, and the barriers to entry into the industry are high, and the company is expected to gain a card position advantage with the early layout. With the gradual removal of the previous generation of AI servers from North American cloud vendors, the company's computing power server remanufacturing is expected to expand.
Investment advice: Considering the storage cycle cycle and the performance elasticity brought about by the server remanufacturing business, we raised our profit forecast. The company's revenue for 2024-2026 is estimated to be 66.43/82.80/9.741 billion yuan, respectively, and net profit to mother will be 790/9.88/1,191 billion yuan, respectively, maintaining the “buy” rating.
Risk warning: Storage price increases fall short of expectations, global business risks.