Inspur Information released its 2024 quarterly report: The company achieved revenue of 17.607 billion yuan in the first quarter of 2024, an increase of 85.32% over the previous year; realized net profit of 306 million yuan, an increase of 64.39% over the previous year; realized net profit of 240 million yuan without return to mother, an increase of 62.96% over the previous year.
Key points of investment
The first quarter's performance increased dramatically, and the AI server penetration rate continued to increase. In the first quarter of 2024, the company achieved operating income of 17.607 billion yuan, an increase of 85.32% over the previous year, and achieved net profit of 306 million yuan, an increase of 64.39% over the previous year, mainly due to increased customer demand and server sales growth. In terms of profitability, the company achieved a gross margin of 8.08% (-4.93pct year on year) and a net margin of 1.68% (-0.39pct year on year) in the first quarter. In terms of period expenses. The company's expenses for the first quarter were 5.85% (-6.06pct year on year), of which the sales/finance/management/R&D expenses ratio was 1.53%/0.01%/0.72%/3.59% (year-on-year decrease -0.86/1.05/0.88/3.27pct), and the first-quarter fee control results were remarkable. In terms of contract liabilities, the company's contract debt for the first quarter of 2024 was 4.14 billion yuan, an increase of 116.47% over the previous year, mainly due to an increase in advance payments. The sharp increase in contract debt is expected to bring huge growth to the company's revenue in the future.
The leading position in the server dragon industry is stable, and demand for servers continues to grow. The “2023-2024 China Artificial Intelligence Computing Power Development Assessment Report” indicates that artificial intelligence is accelerating progress from perceptual intelligence to generative intelligence, and the scale of China's artificial intelligence computing power market is rapidly growing and expanding. In 2023, China's artificial intelligence server market will reach 65 billion yuan, an increase of 82.5% over the previous year; the scale of intelligent computing power is expected to reach 414.1 EFLOPS (10 billion floating point operations per second), an increase of 59.3% over the previous year. As a leading server enterprise, the company covers a series of cloud computing IaaS tier products for all types of high- and low-end servers. At the same time, the company is in a leading position in the world in the fields of AI computing, open computing, and green computing, leading the development and evolution of AI industrialization, industrial AI, and new infrastructure for intelligent computing. According to the latest data released by Gartner and IDC, the company's market share of servers and storage products continues to be among the highest in the world, 1) the 2023 server market is second, China's first; 2) the 2023 storage world's top three, China's first; 3) the 2023 liquid-cooled server market share is the highest in China. Since entering 2024, the AI boom has moved from Wenshengwen and Wenshengtu to the field of Wensheng video. The development of AI has moved from perceptual intelligence to generative intelligence. Demand for AI computing power will increase dramatically, demand for servers will continue to grow, and the company will continue to benefit as a leading server enterprise.
Seize intelligent opportunities to lay out ahead of schedule and release liquid cooling products to implement green “double carbon”
In terms of computing power, the company continues to promote technological innovation in the AIGC field, continuously strengthen its business layout at the level of computing power, algorithms, and scheduling systems, and released a new generation of G7 computing power platforms, covering 46 new products for application scenarios such as cloud computing, big data, artificial intelligence, etc. Among them, the AI training server NF5688G7 with the latest generation integrated architecture has improved the measured performance of the large model of the previous generation platform by nearly 7 times. At the same time, it also released the NF5698G7, a next-generation AI server for generative AI based on the OAM high-speed interconnection of open acceleration modules. At the level of algorithms, the Yuanda model continues to promote technological innovation in the fields of Wensheng and multimodal fields, and continues to promote industrial implementation and application in the fields of intelligent customer service, smart government, and intelligent culture and creativity. The “Source 2.0” basic model released in 2023 includes models with three parameter scales of 102.6 billion, 51.8 billion, and 2.1 billion. As the first fully open source 100 billion parameter model, “Source 2.0” excels in programming, reasoning, and logic. In terms of liquid cooling, Inspur Information continues to implement the “Allin liquid cooling” strategy, promote green carbon reduction in data centers, realize that all four series of products, general purpose servers, high-density servers, cabinet servers, and AI servers support cold plate liquid cooling, and continue to innovate fully liquid-cooled cabinets and cabinet-type cooling capacity distribution units. Furthermore, through close cooperation with upstream and downstream of the liquid cooling industry chain, Inspur Information is actively leading the construction of liquid cooling patents and standards to promote the healthy development of the liquid cooling industry.
Profit forecasting
The company's revenue for 2024-2026 is 766.46, 902.82, and 108.056 billion yuan, respectively, and EPS is 1.47, 1.87, and 2.20 yuan respectively. The current stock price corresponds to PE of 28, 22, and 19 times, respectively, maintaining a “buy” investment rating.
Risk warning
Demand falls short of expectations, new market development risks, raw material supply risks, and political risks.