When facing thousands of listed company announcements every day, which ones should you read? What are the key points to take away from the dozens or hundreds of pages of material announcements? Are the many professional terms in the announcements bullish or bearish? Check out Caixin's "Quick Read Announcement" column, where our reporters across the country will provide you with accurate, fast and professional interpretations on the night of the announcement.

On the evening of July 24, Cailian Press (Reporter Luo Yichen) reported that the continued weakness of the steel industry has forced a group of steel companies to accelerate their transformation. Hangzhou Iron & Steel Co., Ltd. (600126.SH) announced today that it plans to invest RMB 0.374 billion to build a computing power cluster to provide external computing power services. This is also a new layout in the digital economy industry since the company's first cross-border IDC in 2019.

In the announcement, Hangzhou Iron & Steel Co., Ltd. stated that the transaction was originated from its wholly-owned subsidiary Zhejiang Province Data Management Co., Ltd. (hereinafter referred to as Data Company) winning the bid for the computing power service procurement project. Therefore, it plans to purchase a batch of AI servers and other equipment, build a computing power cluster of no less than 68 Pflops, and provide computing power services for a period of 4 years to the bidding party. But the announcement did not mention the situation of the bidding party.

In fact, entering the AI computing power leasing industry at this stage faces certain risks. Cailian Press reporter noticed that Henglin Home Furnishings (603661.SH), a home furnishing manufacturer, had previously planned to cross-border into the computing power industry but had to give up due to the untimely procurement of AI servers. This new business attempt by Hangzhou Iron & Steel may also encounter similar difficulties. The company stated that due to the tight supply and price fluctuations of AI servers, as well as the short construction period and delivery time of this project, there are indeed supply risks in purchasing equipment. In addition, the data company lacks experience in AI server technical support and there is also a performance risk.

Although facing many challenges, Hangzhou Iron & Steel believes that the company's current digital economy industry focuses on traditional data centers and big data business and urgently needs to find opportunities to enter the field of artificial intelligence. This new project will be an ideal door opener.

It is worth noting that Hangzhou Iron & Steel has been laying out the digital economy industry for many years, and has spent a lot of money to expand its territory. However, its contribution to performance is still difficult to say is ideal. In 2019, the company spent RMB 0.95 billion to acquire Hangzhou Hanggang Cloud Computing Data Center Co., Ltd., its first IDC cross-border attempt. In 2020, Hangzhou Iron & Steel announced an investment of RMB 3.979 billion to build the Zhejiang Cloud Computing Data Center project.

However, in terms of actual performance returns, the company's digital economy industry as a whole is still in the investment stage. The 2023 annual report shows that the net income of Hangzhou Hanggang Cloud Computing Data Center Co., Ltd. for the whole year is only about RMB 1.62 million, the subject of this transaction, Data Company, is slightly loss-making, and the operating entity of the Zhejiang Cloud Computing Data Center project, Zhejiang Cloud Computing Data Center Co., Ltd., is even loss-making nearly RMB 19 million.