The company expects to achieve an operating income of 1.286 to 1.340 billion yuan in 2020, and a net profit of 150 to 22 million yuan, which is basically the same as the previous year; the company expects 2020Q4 revenue to be 5.91 billion to 645 million yuan, an increase of 12% to 22% over the same period last year. The company's IDC and cloud computing business have plenty of orders on hand, and the share of revenue continues to rise. It continues to be optimistic about the leading position of the company's third party IDC in the Greater Bay area and its business transformation, and maintains its "overweight" rating.

The annual performance is basically the same as the same period last year, and the business structure is expected to continue to improve. The epidemic at home and abroad in 2020 had a certain negative impact on the start of domestic projects and the delivery of overseas orders, resulting in the company's annual revenue level unchanged from last year. However, with the sustained and rapid growth of IDC and cloud computing business, we expect the annual revenue share to increase to nearly 60%. We judge that due to the impairment of accounts receivable / inventory and other impairment in traditional business, the company's annual results are basically the same as the previous year. The company estimates that the impact of non-recurrent profit and loss on the return net profit is about 42 million yuan, mainly for investment income, government subsidies and so on.

Revenue returned to growth in the fourth quarter, and non-profit deduction still needs to be further improved. In a single quarter, the company expects 2020Q4 revenue to be 5.91 to 645 million yuan, an increase of 12% to 22% over the same period last year, and a significant improvement compared to 2020Q1/Q2/Q3 's decline of 6%, 18% and 19%; the company expects 2020Q4 net profit to be 71 to 7.71 million yuan, an improvement compared to 2019Q4's 7.7 billion yuan; however, the company expects 2020Q4 to deduct a non-parent net profit loss of 11.52 million yuan, which still needs to be further improved.

IDC and cloud computing have plenty of orders on hand, and the company's hematopoietic capacity is expected to continue to pick up. The company owns Shenzhen Guangming / Guangzhou Nansha / Dongguan Qifeng / Dongguan Shijie / Changsha Yungu five big data Center, and has successively signed over 5 billion yuan IDC leasing service contracts with Ping an Telecom / Guangdong Telecom / Hunan Telecom / Changsha Mobile, and the existing orders can cover the rack capacity already invested. The company's fund-raising project "Zhengtong Wisdom Guangmingyun data Center Project" plans to build another 1520 cabinet highly reliable data centers in Guangming, Shenzhen, to form an interconnection with Guangzhou / Changsha / Dongguan, and to create a wide-area interconnected wisdom park operation platform. At present, the company has more than 80 core researchers in IDC and cloud computing, has independently developed a large number of cloud products, and has established cooperative relations with Ping an / BABA / Huawei / Tencent / Baidu, Inc. and other public cloud manufacturers. We expect the company's IDC and cloud computing business to achieve more than 30% compound growth in the next three years, leading to a continuous recovery in the company's hematopoietic capacity.

Risk factors: the progress of IDC and cloud computing business is not as expected; the negative impact of traditional business is expected; the overall transformation progress of the company is not as expected; the impact of the global epidemic is higher than expected.

Investment advice: maintain the company's 2020 IDC and cloud computing business orders on hand, the share of revenue continues to increase, continue to be optimistic about the company's leading position and business transformation of the third party IDC in the Greater Bay area, and maintain the "overweight" rating.