The company's Q1 revenue continued to grow, and AIDC's business expansion was smooth
The company's revenue in '23 was 4.351 billion yuan, YOY +60.27%; net profit to mother was 1,762 billion yuan, YOY +47.03%; gross margin was 48.57%, -4.54pct year on year. The decline in gross margin was mainly due to the company's low early gross margin of 33.10%, which is expected to pick up as AIDC's business scale expands in the future; the overall cost level remains relatively stable, with sales/management/R&D/finance expense ratios of 0.06%/3.86%/2.33%/2.87% year on year, respectively- 0.08/-0.60/-1.24/-0.21pct
The 24Q1 company's revenue was 1,242 million yuan, YOY +53.65%; net profit to mother was 474 million yuan, YOY +43.81%; gross margin was 47.34%, YOY -6.59pct; sales/management/R&D/finance expense ratios were 0.04%/3.19%/3.03%/3.74%, respectively, 0.04/-2.02/-0.70/+1.34pct, respectively.
Delivered to the Liquid-Cooled Intelligent Computing Center, AIDC became the second growth curve. In 23 years, the company took the lead in deploying large-scale computing power modules in the Beijing-Tianjin-Hebei Park and Yangtze River Delta Park, achieving revenue of 1,199 billion yuan, accounting for 27.56% of the company's total revenue, creating the company's second growth curve.
In '23, the company successfully delivered the industry's first fully liquid-cooled intelligent computing center. The power of a single cabinet exceeded 20KW, and the listing speed reached the highest level in history, and the PUE dropped to 1.16. The company has first-mover advantages, technical advantages and well-known customer demonstration effects, and is expected to open up a situation in the field of liquid cooling intelligent computing.
The company actively grasped AI development opportunities, increased capital investment and R&D investment in the field of intelligent computing, took the lead in deploying large-scale computing power modules in the Beijing-Tianjin-Hebei Park and Yangtze River Delta Park, and planned a scarce domestic intelligent computing center single project capable of gathering 100,000 cards or more in Area B of Langfang.
IDC's business delivery accelerated and entered a new stage of multi-park driven growth. As project delivery accelerated and the listing rate remained high, the company's IDC business revenue and gross margin increased steadily in '23, achieving revenue of 3.152 billion yuan, YOY +16.10%; gross profit margin of 54.46%, +1.35pct year on year.
In '23, the company delivered 5 new computing power centers, about 30,000 cabinets; by the end of '23, it had delivered a total of 13 computing power centers, with a total of 76,000 cabinets, an increase of 65% over the end of '22, and the shelf rate of mature computing power center cabinets remained above 90%. In terms of incremental projects, for the third time, the company deployed new resources in Danzhou, Hainan, with the aim of improving the cross-border layout and planning about 30,000 cabinets; in terms of stock projects, the second phase of the project in many places added important resources such as land and energy consumption. At the end of '23, the company's energy consumption index reserves increased 38% compared to the end of '22. In January '24, the Beijing-Tianjin-Hebei Park put into operation a self-built 220KV substation, and other parks are also actively preparing.
The target profit for equity incentives grew rapidly in '23, and the distribution of cash dividends attached great importance to shareholders' returns. In November 23, the Company's 2023 Restricted Stock Incentive Plan completed the grant registration. The incentive target was granted 3.616 million restricted shares at a price of 14.38 yuan/share, accounting for 0.21% of the total share capital of the company before the grant. The performance evaluation index was based on the company's net profit for 24 years. The net profit growth rate for 25-27 was not less than 50%/75%/100%, respectively.
In October '23, the company implemented a profit distribution plan for the year 23 and a half, and distributed 3.90 yuan in cash (tax included) to all shareholders for every 10 shares. Meanwhile, the 23 and 24 mid-term profit distribution plan proposes to distribute a cash dividend of $1.27 (tax included) to all shareholders for every 10 shares, for a total cash dividend of $219 million (tax included).
Profit forecasting and valuation
At present, the company has built 7 AIDC intelligent computing infrastructure clusters in 6 core regions, basically completed the national “integrated computing power center system” framework layout, and is planning about 61 intelligent computing centers and about 320,000 racks. It is expected that a total of five intelligent computing centers will be delivered in 24 years.
The company is a scarce target for high-power liquid-cooled IDC in China. With leading Internet and cloud vendors as its main customers, the IDC+AIDC business is two-wheel drive, which is expected to benefit from continued growth in computing power demand. Net profit for 24-26 is estimated at 21.72/31.69/3996 billion yuan. The current market value (closing price on May 6, 2024) is 24/17/13 times PE for 24-26, respectively, giving a “buy” rating.
Risk warning
Product delivery schedule falls short of expected risk; cabinet delivery rate falls short of expected risk; industry competition increases risk.