Incident: The company released its 2023 annual report, with revenue of 7.673 billion yuan, up 0.76% year on year; net profit to mother was 828 million yuan, up 3.43% year on year.

The company released its 2024 quarterly report, with revenue of 1,019 million yuan, a year-on-year decrease of 22.98%; net profit to mother was 12 million yuan, a year-on-year decrease of 83.22%.

The digitalization of electricity is growing rapidly. In 2023, the company's electricity digitization business revenue was 2,056 billion yuan, up 24.43% year on year; enterprise digital business was 1,955 billion yuan, down 4.58% year on year; cloud network infrastructure revenue was 3.639 billion yuan, down 6.56% year on year. The company's gross sales margin was 21.56%, up 0.96 percentage points from the same period last year; the net profit margin was 10.79%, up 0.26 percentage points from the same period last year.

The demand for electronic digitization continues. Aiming at the power grid marketing field, the company formed a “baseline +” version and standard version of the unified marketing 2.0 software adapted to the entire network of the State Grid Corporation to achieve standardization of electricity marketing business and full business coverage, successfully supported the promotion and launch of marketing 2.0 by 13 State Grid provincial companies, and guaranteed the stable operation of 19 State Grid provincial companies. The State Grid Group is committed to building a new type of power grid. Strong digital grids are a deep integration of digital technology such as artificial intelligence, edge computing, digital twins, blockchain, security protection, advanced information and communication technology, control technology, and energy and power technology such as flexible DC, friendly access to renewable energy, and coordinated source network load storage control.

Investment advice: The company is the core company for the digitalization of power grids. The company's EPS is expected to be 0.84\ 0.98\ 1.13 yuan in 2024-2026, respectively, maintaining a “buy” rating.

Risk warning: Digitalization of the power industry has fallen short of expectations; industry competition has intensified.