Incident: The company released its 2024 quarterly report, achieving operating income of 17.607 billion yuan, an increase of 85.32% over the previous year; net profit to mother was 306 million yuan, an increase of 64.39% over the previous year.
Comment:
Revenue increased significantly in the first quarter, and net profit far exceeded the same period last year. (1) 2024Q1, the company achieved operating income of 17.607 billion yuan, up 85.32% year on year. Revenue growth was mainly due to increased customer demand and server sales growth; operating costs of 16.184 billion yuan, gross profit margin of 8.08%, down 4.6 percentage points year on year; (2) In the first quarter, the company's sales expenses were 269 million yuan, sales rate 1.66%, down 1.05 percentage points year on year; management expenses of 127 million yuan, management rate 6.32%, down 1.07 percentage points year on year; R&D expenses 6.32 100 million yuan, R&D rate was 3.9 percent, down 3.89 percent year on year; financial expenses were 0.2 billion yuan, financial rate 0.01%, compared to 99 million yuan in the same period last year, mainly due to exchange rate fluctuations and increased exchange earnings; (3) In the first quarter, the company's net profit to mother was 306 million yuan, up 64.39% year on year, and performance far exceeded the same period last year.
Demand for AI servers increased, and the company increased procurement of upstream components. 2024Q1, the company's contract debt reached 4.140 billion yuan, an increase of 116.41% over the previous quarter, mainly due to an increase in pre-received customer payments. Demand for AI servers increased significantly in the first quarter. As a result, the company increased its procurement of raw materials, which led to a significant increase in inventory. We speculate that the company is currently at a high point in raw material inventory. The company's monetary capital was 7.117 billion yuan, a decrease of 40.76% over the previous month. The main reason was the expansion of the company's business scale and the increase in procurement payments. Accounts payable amounted to $11.037 billion, up 20.65% month on month; inventory was 24.290 billion yuan, up 27.07% month on month, of which upstream components were the main components of inventory. Looking ahead to 2024, the company is increasing its inventory to meet market demand, and the annual performance is expected to improve.
Company profit forecast and investment rating: Benefiting from major trends in the global AI industry, we expect the company's 2024-2026 revenue to be 72,493 billion yuan, 833.77 billion yuan, 95.898 billion yuan, and net profit to mother of 2,068 billion yuan, 2,667 billion yuan, and 3.391 billion yuan respectively. The corresponding PE is 27, 21, and 17 times, respectively, giving it a “recommended” rating.
Risk warning: AI server sales fall short of expectations, high dependence on core device vendors, decline in the domestic real economy, etc.