Incident: On May 9, 2024, according to the official account of Jiulian Technology, the company recently successfully won the bid for the 2024 centralized procurement project of the Gansu Branch of Telecom Co., Ltd. Jiulian Technology's self-developed and nationally produced portable hosts MPM104 and MPM105 won the bid in both packages. Among them, Standard Package 1 (low version) won 30% of the bid share and Standard Package 2 (high version) won 50% of the bid share.
The localization plan has been in place for a long time. According to the official website of Jiulian Technology, as early as November 2022, Jiulian Technology released the Jiulian TPM101 desktop computer based on the Pangu M900 solution. It is equipped with a Pangu M900 8-core 64-bit high-performance processor, has a built-in independent security core, supports hardware secret algorithms, and is equipped with the Unicom operating system V20 and the Galaxy Kirin operating system V10 SP1 domestic operating system to meet the needs of office and daily entertainment. According to the company's annual report for '23, ongoing research projects include Xinchuang computer research and development based on the Pangu M900. As of the end of '23, it is in the user promotion stage and is suitable for localised computer replacement for operators or other industries.
According to the tender notice issued by Gansu Telecom on April 7, 2024, the specific requirements for domestic thin terminal collection are: standard package 1 (low version) tender for 4000 units and standard package 2 (high configuration version) for 1,000 units. According to the candidate announcement issued by Gansu Telecom on April 29, 2024, Jiulian Technology is the second candidate (30% share, corresponding demand of 1200 units), the bid price without tax was 880 yuan, and the bid price was 880 yuan (50% share, corresponding demand of 500 units). The total bid amount won this time was 1,746 million yuan (excluding tax). We believe that although winning the bid this time is absolutely small, the benchmark is significant. The company is expected to use this to open up the operator credit innovation market and fully meet the needs of the three major operators represented by China Telecom in various industries such as office and production.
Profit forecast: We expect the company's revenue for 2024-2026 to be 3.42 billion yuan, 4.535 billion yuan and 5.871 billion yuan respectively, net profit to mother of 145 million yuan, 267 million yuan, 426 million yuan, and EPS 0.29 yuan, 0.53 yuan, and 0.85 yuan respectively. Referring to the company's historical valuation and the average valuation level of comparable companies, the company was given a 2024 dynamic PE range of 50-55X, corresponding to a reasonable value range of 14.54-15.99 yuan, which is “superior to the market” rating.
Risk warning: operators' capital expenditure falls short of expectations; new business market expansion such as Hongmeng, Xinchuang, and computing power falls short of expectations; market competition intensifies.