Incidents:
On April 30, 2024, the company released the 2023 Annual Report and the 2024 First Quarter Report. In 2023, the company achieved operating income of 8.826 billion yuan, up 8.17% year on year; net profit to mother was 439 million yuan, up 3.38% year on year; net profit after deducting non-return to mother was 427 million yuan, up 4.10% year on year. With 2024Q1, the company achieved operating income of 2.119 billion yuan, a year-on-year decrease of 6.75%; net profit to mother was 127 million yuan, a year-on-year decrease of 8.71%; net profit after deducting non-return to mother was 125 million yuan, a year-on-year decrease of 8.65%.
The company continues to deepen computing power services, raising funds to build a cloud computing center, and the company's computing power management and maintenance services have already been implemented in various supercomputing centers such as the National Supercomputing Center in Shenzhen and the China-ASEAN Artificial Intelligence Supercomputing Center. The company publicly issued convertible corporate bonds to raise RMB 1,090 billion to build the Wuxiangyungu Cloud Computing Center project. The computing center is the highest-level and largest cloud computing data center in Guangxi so far. On the basis of the Wuxiang Yungu Cloud Computing Center, the company increased investment in upgrading computing power services, procured high-performance computing power servers, and built Runjian Co., Ltd. intelligent computing power center to provide customers with intelligent computing cloud leasing services.
Promote the implementation of intelligent management and maintenance, win the bid for the China Mobile Network Comprehensive Maintenance Service Project, maintain steady development of the company's communication network business in 2023, and continue to promote the implementation of intelligent management and maintenance. The company won the bid for China Mobile's 2023-2026 integrated network maintenance service procurement project. The number, share, and amount of winning provinces continued to rank first, and its market share increased dramatically. Of the 21 provinces that won the bid, 15 provinces ranked first in share; new breakthroughs were made in the business of many key provinces such as Shanghai, Jiangxi, Hubei, Liaoning, and Zhejiang. At the same time, in Unicom and the tower business, it continues to break through procurement-related businesses in Jiangxi and Gansu Unicom provinces, continuously increasing its market share and maintaining steady growth.
Profit Forecasts, Valuations, and Ratings
We expect the company's revenue for 2024-2026 to be 108.52/131.53/15.457 billion yuan, respectively, with year-on-year growth rates of 22.95%/21.20%/17.52%; net profit to mother of 587/7.07/814 billion yuan, respectively, with year-on-year growth rates of 33.84%/20.48%/15.08%; EPS 2.09/2.52/2.90 yuan/share, respectively, and a 3-year CAGR of 22.89%. In view of the remarkable progress of the company's computing power services, based on comparable company valuations, we gave the company 25 times PE in 2024, with a target price of 52.27 yuan, maintaining a “buy” rating.
Risk warning: operator expenses fall short of the expected risk; the investment of computing power resources falls short of the expected risk.