Company event: The company released its 2023 annual report and 2024Q1 performance report. In 2023, it achieved revenue of 7.855 billion yuan/ +9.24%; net profit to mother of 388 million yuan/ +144.09%. 2024Q1 achieved revenue of 1,978 billion yuan/ +5.25%, and net profit of 164 million yuan/ -5.50% to mother.
Q1 Revenue grew steadily, and profitability continued to improve: 2024Q1 achieved revenue of 1,978 billion yuan, up 2.91% month-on-month, and achieved gross profit margin of 18.67%, up 2.13% month-on-month; in 2023, the company achieved operating income of 7.855 billion yuan, up 9.24% year on year, and achieved gross profit margin of 16.04%, up 0.65% year on year, and the company's profitability improved significantly. In 2023, the company's sales expenses ratio is 0.48%/+0.3%, management expenses ratio 3.36%/+0.1%, R&D expenses rate 3.25%/-0.5%. The company's cost control is strict, and the cost rate is relatively stable. The US dollar interest rate hike and exchange rate fluctuations during the reporting period put pressure on the company's profits in the short term. In '23, the company increased the amount of dividends to give back to investors. The total amount of dividends was 180 million, accounting for 46.33% of net profit attributable to mother.
Cloud computing empowers core competitiveness, and IDC's business continues to expand: the company's main products are cloud computing and IDC services. Among them, the revenue of the cloud computing business for 23 years was 5,544 billion yuan, an increase of 10.56% over the previous year, accounting for 70.58% of the company's overall business revenue. During the reporting period, Amazon Web Technology, operated by the company, implemented nearly 500 new features and services, from infrastructure technologies such as computing, storage, and databases, to emerging technologies such as machine learning, artificial intelligence, data lakes and analysis, and the Internet of Things, to enable customers in cross-border e-commerce, pan-entertainment, intelligent manufacturing, gaming, life sciences, finance and other industries, and the business continued to grow. IDC's revenue for 23 years was 2,221 billion yuan, up 6.28% year on year, and business gross profit margin was 35.75%, down 1.55% year on year. The decrease in gross margin was due to the country's green energy development and international energy shortages, which led to an increase in industrial electricity costs. After all of the company's nationwide data center projects are completed, the operating scale of the cabinet will exceed 110,000, and currently 52,000 cabinets have been put into production. The company invested more than 10,000 data center resources in the Hebei Yanjiao project, and the listing rate reached 70%. The project is progressing smoothly, and the business is growing steadily.
Deploy high-performance computing power services and actively plan IDC's global layout: the company's computing power center already has a computing power scale of about 600P, the intelligent computing center has high-standard data center infrastructure, and high-performance computing hardware such as Nvidia is deployed. The subsidiary Aurora Cloud Data has built a highly elastic multi-heterogeneous computing power scheduling platform to provide high-performance intelligent computing services for application scenarios such as large model training, deep learning, and high-performance computing. The layout of the intelligent computing center will bring the company a wider market space, accelerate business innovation and improve digital service levels. In addition, the company is actively developing the global IDC business. It plans to invest in the construction of an intelligent computing/cloud computing base project in Johor, Malaysia. The planned land use is 14.4 acres, the IT load of the project is 45 megawatts, and the first phase plans to build 2,500 6kW standard 2N cabinets to enhance the international competitiveness of the company's IDC business.
Investment advice: We believe that the company will continue to develop the cloud computing business and expand IDC's global business layout, and medium- to long-term performance is expected to continue to improve. We gave the company a net profit forecast value of 565 million yuan, 653 million yuan, and 759 million yuan, corresponding EPS of 0.31 yuan, 0.36 yuan, and 0.42 yuan, corresponding PE of 28.20 times, 24.38 times, and 20.98 times. Considering the increase in the company's core competitiveness, we raised the “recommended” rating.
Risk warning: Risk of cabinet availability falling short of expectations; risk of overseas projects falling short of expectations; risk of increased competition in the IDC market.