Case BL: on AR4y] The 2023 annual report was released on the evening of April 17, and the 2024 quarterly report was released on the evening of April 26. The gross profit margin was 48.57%, a year-on-year decrease of 5.36pct; net profit to mother was 1,762 billion yuan, an increase of 47.03%; net profit without return to mother was 179,900 yuan, an increase of 50.18% year on year, and annual results achieved rapid growth.
Comment: The results for the first quarter of 2024 maintained a rapid growth trend, and the rapid increase in AI computing power demand and related capital expenses led to the rapid development of AIDC's data center business. On a quarterly basis, in the first quarter of 2024, the company achieved revenue of 1,242 billion yuan, a year-on-year increase of 53.65%; gross profit margin of 47.34%, a year-on-year decrease of 6.59pct; realized net profit of 474 million yuan, an increase of 43.81% year on year; realized net profit without return to mother of 471 million yuan, an increase of 45.48% year on year.
The company continues to expand IDC's scarce resources, and IDC delivers existing projects faster; expands new projects in Danzhou, Hainan, and steadily increases energy consumption index reserves. By the end of the reporting period, the company had deployed 61 intelligent computing centers across the country, with a total of 320,000 cabinets, mainly concentrated in satellite cities such as Beijing, Shanghai, Guangzhou, and Shenzhen, and had basically completed the national “integrated computing power center system” framework layout.
In 2023, the company delivered 5 new computing power centers, adding about 30,000 new cabinets, including 3 in the Beijing-Tianjin-Hebei Park and 1 each in the Yangtze River Delta and Greater Bay Area parks. The company delivered a total of 76,000 cabinets in 2023, an increase of 65.22% over the previous year, and the shelf rate of mature computing power center cabinets was 90%. The company laid out a new project in Danzhou, Hainan during the reporting period, and planned 30,000 cabinets. The company's energy consumption index reserves in 2023 increased by 37.65% year-on-year compared to 2022, providing a strong guarantee for the long-term development of the company's IDC resources.
The company's liquid cooling IDC has gained a first-mover advantage, deeply binds leading customers, and actively lays out AIDC's high-growth business. With its unique model of “self-investment, self-construction, self-maintenance, self-operation and maintenance”, the company has industry-leading stability, self-evolution capabilities, and network security advantages, and has won the deep trust of leading domestic Internet, cloud computing and terminal models. The company successfully delivered the industry's first complete pure liquid cooling intelligent computing center during the reporting period, establishing strong first-mover advantages and technical advantages in liquid cooling technology.
Profit forecast and investment advice: Runze Technology is a leading IDC operator in China, with the advantages of core IDC resources and major customer resources. We are optimistic that the company will benefit from high downstream AI computing power and growing demand, which will drive the company's IDC business and AIDC business to achieve rapid development. The company is expected to achieve revenue of 60.52/80.40/10.291 billion yuan in 2024-2026, and net profit to mother of 22.70/31.59/4.163 billion yuan, corresponding to EPS 1.32/1.84/2.42 yuan/share. It is covered for the first time, giving it a “buy” rating.
Risk warning: The development of the IDC industry falls short of expectations, and downstream customer demand falls short of expectations.