Backed by Inspur Group, it focuses on enterprise software and cloud services. Inspur Digital was incorporated in the Cayman Islands on January 29, 2003, listed on the Hong Kong Stock Exchange GEM in April 2004, then moved to the Hong Kong Main Board. Its main business is enterprise management software, enterprise cloud services and IoT solutions. The company is supported by intelligent ERP, industrial software, and PaaS platform product systems to help the digital transformation of the entire enterprise business from digitalization of management and digitalization of production and operation. By the end of 2023, digital transformation services had been provided to 76 state-owned enterprises, 186 of China's top 500 companies, and more than 1.2 million enterprises.
The operation was steady, and net profit increased substantially. In 2023, the company achieved revenue of 8.294 billion yuan, an increase of 19.1% year on year; net profit to mother was about 202 million yuan, an increase of about 69.9% year on year. The sharp increase in net profit was mainly affected by the following factors: ① The Management Software Division achieved operating profit of 388 million yuan, an increase of 68.9%; ② the Internet of Things and Solutions Division achieved operating profit of 55 million yuan, an increase of 11.9% year on year; ③ The company continued to develop the cloud service business and increase investment in R&D. Although the business maintained steady growth, it was still in a state of marketing promotion and loss. The operating loss of the Cloud Service Division was 56 million yuan, a year-on-year decrease of 57.8%.
The cloud service business product system has been fully upgraded, and the high-end market position has been further consolidated and enhanced.
In 2023, the company released the Haiyue PaaS platform iGIX 6.0, forming seven major sub-platforms including a low-code platform, IoT platform, data center, Haiyue big model, hybrid integration platform, cloud-native platform, and intelligent operation and maintenance platform. It comprehensively enhances the four major capabilities of intelligent automation, full connectivity, flexible assemblability, and open ecology, maintaining the top overall competitiveness of aPaaS in China, seizing the digital technology base market for large enterprises, and breaking through 40 large enterprise customers including China National Machinery and China Aviation Communications.
In 2023, the company released the Haiyue Big Model InGPT, which covers various intelligent applications and services such as intelligent dialogue, conversational data decision analysis, intelligent development assistant, and smart contract review. It goes deep into enterprise service fields such as finance, treasury, supply chain, software development, etc., to help enterprises automate and intelligent transformation and upgrade, and is applied to customers such as Dongfang Electric.
In 2023, the company released the intelligent ERP GS Cloud 6.0 for large enterprises in Haiyue. The product system is more complete, and significant improvements have been achieved in terms of integration and intelligence. In terms of integration, based on the successful implementation of strategic projects such as Luhua and Bohua, an “eight horizontal and eight vertical” high-speed channel for integrated business and finance has been built to create an end-to-end vertical and horizontal full-process digital platform. In terms of intelligence, intelligent technologies such as big models, machine learning, and knowledge maps are integrated into various product fields, large-scale models for the enterprise sector have been built, and various AI service capabilities such as intelligent Q&A and intelligent recommendations are provided. It successfully broke through major strategic customers such as China Huadian, Datang Group, China Salt Industry, Kweichow Moutai, China Rare Earth, Beijing Energy, Guangzhou City Investment, Guangzhou Construction, and Chinatungsten Hi-Tech.
Comprehensively enhance the overall solution capabilities of intelligent manufacturing. In 2023, the company released Inspur Haiyue Industrial Software MOM 6.0. MES product capabilities initially reached international advanced software standards in the equipment manufacturing industry. Three new products were added: HSE, PHM, and EMS, forming a complete industrial software product system with all-factor smart factory construction capabilities. A comprehensive intelligent manufacturing integration model with MOM as the core has been formed, and it already has large-scale promotion capabilities in the equipment manufacturing industry. It signed a contract with TBEA and the Jinan Second Intelligent Machine Tool Structural Parts Factory, and obtained 18 scientific and technological achievements at the provincial and ministerial levels.
Profit forecasting and investment advice. We believe that the company has strong competitiveness in the markets of central enterprises, state-owned enterprises and large enterprises. Under the rapid development of new technologies such as cloud computing and AI, the company continues to invest in R&D and innovation, comprehensively upgrade the Haiyue software product system, help enterprises digitalize and intelligently transform enterprises, and continue to promote the domestic replacement process of management software such as ERP. We expect the company's cloud service business to continue to grow rapidly in 2024-2026, with growth rates of 40%/38%/32% respectively; the enterprise management software business will grow steadily, with growth rates of 10.0%/9.8%/9.6%, respectively; and the IoT business growth rate will be 10%/8%/5%, respectively. As the share of cloud service businesses with high gross margins increases, we expect the company's overall gross margin to increase to 24.5%/25.5%/26.5% in 2024-2026.
We expect the company to achieve revenue of 97.24/11391/13.140 billion yuan in 2024-2026, up 17.2%/17.1%/15.4% year on year; net profit to mother will be 3.06/4.39/ 622 billion yuan, respectively, up 51.6%/43.7%/41.7% year on year; EPS 0.27/0.38/0.55 yuan respectively. Referring to comparable companies, the company was given 15-17 times the 2024 dynamic PE, with a reasonable value range of RMB 4.02-4.55 (HK$4.37-4.95, converted to HK$1 = RMB 0.92) /share. The first coverage gave it a rating of “superior to the market”.
Risk warning. Market competition intensified; demand fell short of expectations; cloud service business losses fell short of expectations.