Introduction to this report:

The company's independent database products have increased revenue, and the commercialization strategy has been successfully transformed. Safety and reliability have become the core factors in database selection. The openGauss ecosystem is developing rapidly, and the company has OpenGauss full-stack capabilities, which is expected to exceed expectations.

Key points of investment:

Covered for the first time, a “gain” rating was given. The company's EPS for 2024-2026 is expected to be -0.06/0.33/0.83 yuan respectively. Referring to the average valuation level of comparable companies, the target price will be 25.98 yuan based on 13.66 times PS in 2025, corresponding to 78.73 times PE, giving a “gain” rating.

The revenue of the company's independent database products continues to increase, and the transformation of the commercialization strategy is smooth. The company initially engaged in overseas database product sales with a low gross margin, then established a self-development strategy for database products in 2014, and fully transformed the OpenGauss technology route in 2020 and released the Vastbase G100, an independent database product based on OpenGauss. In 2021-2023, the sales revenue of the company's independent database products was 6.82 million yuan, 18.86 million yuan and 36.45 million yuan respectively, achieving explosive growth. The gross margin of the independent database product sales business is as high as 99%, driving the continuous improvement of the company's overall gross margin, and the transformation of the commercialization strategy is smooth.

Safety and reliability have become the core factors in database selection, and the openGauss ecosystem is developing rapidly. According to IDC statistics, China's locally-deployed relational database software market size was about 1.39 billion US dollars in 2023, and the total market share of the four largest foreign database vendors reached 37.1%. The market size is expected to grow to 2.6 billion US dollars by 2028, with a compound annual growth rate of 13.3% during the period. With the frequent occurrence of major information security incidents at home and abroad in recent years, government and enterprise customers are paying more and more attention to the security considerations of database products. Policies such as the “Safety and Reliability Assessment Work Guidelines” and “Government Procurement Requirements Standards (2023 Edition)” all require that database products pass a safe and reliable evaluation before they can be purchased. As an open source relational database led by Huawei and born in China, openGauss has ushered in rapid development under policy dividends. The new market share of openGauss databases in China increased rapidly from 1% in 2021 to 21.9% in 2023, and will continue to develop rapidly in the future.

Massive data has OpenGauss full-stack capabilities, which is expected to exceed expectations. Massive data is deeply involved in the construction of the OpenGauss ecosystem. The code contribution to the OpenGauss kernel is second only to that of Huawei. It can provide openGauss distribution database software products, openGauss database migration operation and maintenance services, and openGauss distribution all-in-one database products in a full stack to meet the usage needs of different users. The company's G100 database is one of the first OpenGauss database products to pass the safe and reliable evaluation. It successfully won the bid for Xinchuang Framework procurement from leading customers such as Guodian Nanrui and Huaneng Group in 2024, and is expected to exceed expectations in the future.

Risk warning: The risk of increased market competition and shrinking IT budgets for downstream government and enterprise customers.