Revenue for the first three quarters of 24 years was +67.1%, after deducting non-net profit +186.6% year-on-year, which is basically in line with expectations.

Revenue for the first three quarters of 24 years was 5.395 billion yuan, +67.1% year-on-year, net profit of 0.557 billion yuan, +184.5% year-on-year, after deducting non-net profit of 0.547 billion yuan, and +186.6% year-on-year, mainly due to increased revenue scale and optimization of product layout, development of high value-added products, and enhanced company profitability.

24Q3 single-quarter revenue of 1.817 billion yuan, -0.1% month-on-month, net profit of 0.199 billion yuan, +1.9% month-on-month after deducting non-net profit of 0.193 billion yuan, +0.6% month-on-month; gross profit margin 18.62%, +0.08pct month-on-month, net profit margin 10.80%, +0.10pct month-on-month, net profit margin 10.61%, +0.08pct month-on-month.

24Q3 data storage device revenue increased steadily from month to month, and IoT smart terminals may benefit from the release of high-margin products.

1) The largest business data storage device 24H1 had revenue of 2.317 billion yuan, accounting for 65% and a gross profit margin of 11.82%. Benefiting from a steady increase in shipments, 24Q3 data storage equipment revenue increased month-on-month, but in the short term, due to poor demand for downstream terminals, memory chip manufacturers and channel markets experienced a backlog phenomenon. The company's DDR4 memory chips adopted a necessary sales competition strategy, which led to a narrowing of profit margins.

2) The second-largest business IoT smart terminal 24H1 had revenue of 0.99 billion yuan, accounting for 28% and a gross profit margin of 32.21%. The sales volume of 24Q3 high-margin products continued to grow, and the share of overseas smart security services increased; the V-SaaS video cloud continued to advance, the number of users increased significantly, and the ARPU value increased steadily; the Big Health commercial intelligent unmanned self-service drink machine business has been launched in 71 cities across the country, helping Q3 performance to grow.

It is planned to purchase GPU servers to build a 10,000 card computing power service cluster, and the computing power cloud business is expected to be implemented at an accelerated pace.

In terms of computing power cloud services, since June 2024, the company has successively signed a number of cloud business cooperation agreements with leading customers, including 1) Youwei Super Computing Co., Ltd., 2) Japan's Youbida Co., Ltd., 3) China Mobile International Co., Ltd., and 4) leading domestic Internet companies, laying a solid foundation for the company's global strategy for cloud services. At the same time, the company plans to build a large-scale computing power service cluster (10,000 card level) with large model training and reasoning capabilities. In October 2024, Aojia Software, an indirect holding subsidiary of the company, signed a “procurement framework contract” with Shanghai Yuyun to purchase H20 NVLink AI servers. The planned purchase amount will not exceed 0.9 billion yuan. The AI servers to be purchased will be used to enhance the company's computing power service capabilities.

The company focuses on the “cloud-edge-end” integrated system, leading server remanufacturing, and maintaining the “gain” rating.

The company has launched enterprise-grade SSDs in the storage field; joined hands with Xi'an Sihua's strategic layout in the “cloud-edge-end” field; at the same time, as a pioneer and leader in the domestic server remanufacturing circuit, the company has broad room for future growth. The company's net profit from 2024 to 2026 is expected to be 0.817/1.028/1.411 billion yuan, respectively, corresponding to the 24/25/26 PE of 25/14 times, maintaining the “gain” rating.

Risk warning: product development risk; macroeconomic environment change risk; global business risk; data security and user information protection risk of cloud platform services, etc.