The company announced its 2020 annual report: the company achieved revenue of 2,806 million yuan in 2020, a year-on-year decrease of 25.05%; achieved net profit of 686 million yuan, an increase of 78.55% over the previous year; net profit deducted from non-return mothers was 306 million yuan, an increase of 0.26% over the previous year, and net cash flow from operating activities was 138 million yuan, a decrease of 40.18% over the previous year.
Continuing to advance the “Data Lake +” strategy, increasing the proportion of self-developed software and products drives an increase in gross margin:
(1) Looking at the revenue structure, the share of the company's digital economy infrastructure and data operation and service business revenue increased from 56.95% in 2019 to 67.72% in 2020. By the end of the reporting period, the company had built and operated 23 demonstration lakes. The total amount of Blu-ray storage deployed in the data lake reached 3042 PB, with a magnetic storage capacity of 178 PB; the total amount of data signed by data lake project companies in Taizhou, Wuxi, Xuzhou, Jinnan, etc. that met the operating conditions was 643PB. The company's 14 data lakes generated operating revenue in 2020, and there was a rapid growth trend.
(2) The company continues to increase investment in R&D, and the proportion of self-developed software and products exported continues to increase, driving a further increase in the gross margin of the data lake business. The gross margin of the company's digital economy infrastructure business increased 4.84 percentage points year on year in 2020, and the gross margin of the data operation and service business in 2020 increased 2.09 percentage points year on year. Furthermore, although the company's revenue from the public security information technology business fell 43.8% year on year in 2020, gross margin increased 6.93 percentage points year on year, mainly to concentrate high-quality resources to develop the data lake business, increase the overall gross profit margin of the company's business, and reduce advance funding projects, thus divesting some of its traditional business regional subsidiaries.
This also resulted in the company's long-term equity investment disposal profit and loss of about 330 million yuan in 2020.
The implementation of the data lake accelerated, and a breakthrough in operating capacity was achieved: during the reporting period, the company landed 14 data lake projects including Dalian, Suzhou, Changshu, Yinchuan, Zibo, Weifang, and Xiangyang. The data lake map added 6 provinces including Liaoning, Guangxi, Hubei, Qinghai, Anhui, and Yunnan. The company has set up 5 R&D centers and 15 product lines for Lake Storage, Urban Brain, Digital Retina, Data Bank, and Internet of Things. Furthermore, according to the company's feasibility study report, the Data Lake Project Company can achieve profit about 4 years after starting operation, but at the end of the reporting period, the average time the project company was established was less than 2 years, and Duohu had already exceeded expectations in making early profits. Data operation services mainly include data capitalization services and digital services for enterprises and governments. The former provides users with data extraction, data cleaning, data cataloging, data conversion, digitization of paper files, analog audio and video transcription digitization, data express delivery services, etc., while the latter company's urban brain and data retina products target the pain points and needs of urban management, social governance, public services and industrial upgrading.
Building a Blu-ray application ecosystem with partners such as Huawei: During the reporting period, the company successfully passed the Huawei network security technology certification, procurement certification, and new supplier certification, and became a certified supplier for the Huawei Blu-ray disc library.
Jointly developed a series of joint solutions with Huawei, such as OBS-B distributed opto-magnetic fusion storage, backup and archiving, etc., and jointly developed backup and archival application solutions with many domestic backup and archiving ISV manufacturers. Furthermore, the company and operators have deepened cooperation to jointly develop Blu-ray cloud services. The Blu-ray Data Cloud Lake business has now covered 10 provinces, 13 cities, and 17 locations, including Beijing, Liaoning, Jiangsu, Shandong, and Chongqing, and has deployed more than 200PB of Blu-ray storage capacity.
Profit prediction and investment advice: We are optimistic that the company will rely on the advantages of Blu-ray storage, use the data lake strategy to fully enjoy the market dividends of the construction of a digital China, and work with many partners to build a data lake ecosystem and transform the business model from traditional solution business to product sales and data operation and service. The company's net profit for 2021-2023 is estimated to be 756 million yuan, 996 million yuan, and 1,244 million yuan respectively, and the corresponding EPS is 1.16, 1.53 million, and 1.95 yuan respectively. Referring to the 2021 PE/G valuation of comparable companies, the company was given 0.89-1.11 times that of 2021 PE/G. It is believed that the company's reasonable market value is RMB 21,345 million - RMB 26.681 billion, and the reasonable value range is 32.86 yuan/share - 41.07 yuan/share, maintaining the “superior market” rating.
Risk warning: The risk that the company's Blu-ray storage-related business expansion falls short of expectations.