Incident: The company released its 2023 annual report, with revenue of 13.420 billion yuan, a year-on-year decrease of 4.33%; net profit to mother - 977 million yuan, a year-on-year decrease of 895.98%.

The company released its 2024 quarterly report, with revenue of 2,663 billion yuan, an increase of 21.13% over the previous year; net profit to mother - 250 million yuan, an increase of 18.15% over the previous year.

Business remains stable. In 2023, the company's computing industry revenue was 8.286 billion yuan, a year-on-year decrease of 3.85%; system equipment revenue was 4.300 billion yuan, a year-on-year decrease of 5.07%. The company's overall gross margin was 21.62%, down 3.59 percentage points from the same period last year.

Strengthen technology research and development capabilities. In 2023, the company's R&D expenditure rate was 10.15%, an increase of 0.73 percentage points over the same period last year. The company successfully launched a new generation of high-performance autonomous server products and built the first AI server. In the field of intelligent computing terminals, in terms of personal terminal products, the Feiteng D2000 battle version, Megachip notebook, Megaxin Fat Client, Qingsong motherboard standard products, etc. were introduced and sold all on the shelves.

Wait for the industry's credit innovation market to grow. At the end of September 2022, the State Assets Administration Commission issued Document No. 79, requiring state-owned enterprises, state-owned enterprises and other industries to implement IT infrastructure credit innovation, achieve replacement, and give a certain time frame. As the domestic technology industry continues to mature, it is expected that in the future, industry innovation will be implemented at an accelerated pace.

Investment advice: The company's revenue has begun to resume growth in the first quarter of '24. The company's EPS is expected to be 0.06\ 0.12\ 0.16 in 2024-2026, respectively, maintaining a “buy” rating.

Risk warning: The development of the Xinchuang market falls short of expectations; the development of the system equipment business falls short of expectations; industry competition intensifies.