Key points of investment

Steady growth in performance and increased investment in AI computing power research and development

In the first three quarters of 2023, the company actively adjusted its business strategy and strategy based on the overall environment, achieving revenue of 6.751 billion yuan, +10.87% year-on-year; net profit of 400 million yuan, +10.1% year-on-year; and net profit after deduction of 392 million yuan, +9.65% year-on-year. The gross margin was 18.67%, -0.6pct compared to -0.6 pct. The cost ratio continued to be optimized, while R&D investment in the development and application of “curve scale” platforms and computing power platforms was increased. On a quarterly basis, Q3 had quarterly revenue of 2.158 billion yuan, -2.66%, net profit of 115 million yuan, net profit of 115 million yuan, -8.77% year-on-year, net profit after deduction of 112 million yuan, -10.23% year-on-year. The company's business scale continues to expand, the communication network business is growing steadily, the energy network business is growing rapidly, and the orders in hand have achieved significant year-on-year and month-on-month growth.

The AI computing power leasing business has been launched, and the company that has built an integrated computing power operation and maintenance platform continues to increase investment in AI computing power, and can provide services such as computing power leasing, computing power operation and maintenance, and platform and data services. With the development of artificial intelligence technology and strong demand in the computing power market, the company's integrated computing power management and maintenance platform has won customer recognition and is in a leading position in the industry, and the computing power service business has maintained a growth rate of more than 50%.

In terms of platform and data business, the 2.0 version of the company's “curve scale” generative artificial intelligence industry model development platform realizes multi-modal applications. The internal knowledge base scenario model has been launched, and the self-developed industry model base based on 130 billion parameters is undergoing internal public testing. 23Q3 has updated the “container scheduling platform based on virtualized computing power”, “enhanced sample data management functions”, “batch launch of finished product algorithms”, etc. At present, the curve scale platform has completed application testing and tool development of 25 general-purpose large-scale models, and the curve scale platform 3.0 has already been invested in research and development. In terms of data services, the company continues to promote data accumulation, cleaning and application, laying the foundation for industry model development.

In terms of computing power service business, the company's intelligent computing power center NVIDIA NVLINK H800 and A800 computing power servers have recently officially completed batch listing and delivery to users, and have diversified the company's channels and customers. In the future, it will mainly provide AI big model training, inference computing power, and graphics rendering computing power services, serving big artificial intelligence models, industry models, etc.

In terms of computing power operation and maintenance business, the business includes computing power construction and computing power operation and maintenance. We are committed to improving the operating efficiency of computing power centers, providing intelligent operation and maintenance platforms for computing power centers, integrating the original dynamic loop monitoring system, network management system, and AI computing platform to create an integrated operation and maintenance management platform, which has a good replication effect. Currently, the company and partners such as Huawei have implemented supercomputing center projects such as the China-ASEAN Artificial Intelligence Supercomputing Center Project, the Fujian Multi-Station Al Supercomputing Big Data Center, and the Guangdong-Hong Kong-Macao Greater Bay Area Intelligent Computing Center.

Using artificial intelligence to empower the high-quality development of the three business sectors of communication networks, information networks, and energy networks.

The company is committed to becoming an industry-leading artificial intelligence industry model and computing power service provider. It is based on computing power services and data services, and uses ecological links such as partner models to empower scenario applications. The company has launched AI+ management and maintenance to help traditional businesses enter the smart era and optimize profitability.

Communications operation and maintenance sector: The communication network business has maintained a steady growth trend. Since the beginning of the year, the company has won bids for various projects such as “China Mobile 2023 to 2026 Network Integrated Maintenance Service Procurement Project”, “China Mobile 2023 to 2026 Wireless Network Optimization Service Centralized Procurement Project”, and “2023-2024 Guangdong Unicom Comprehensive Maintenance Procurement Project”, and “2023-2024 Guangdong Unicom Comprehensive Maintenance Procurement Project”, etc., leading the market share and continuing to expand.

Digital business: The company actively adjusts business strategies to focus on customers, regions and key products. Based on the industry model generated by the “Crank Ruler” platform, the company has obtained many typical projects such as the “Power Grid Machine Vision Recognition and Computing Research Project”, “Sports Running Artificial Intelligence Algorithm Recognition System”, and “Highway Maintenance Information Management Platform Road Surface Decision Analysis Project”; products such as the Urban Management Police Command Platform have been sold in 16 cities and 40 districts and counties; smart campus solutions have been implemented in more than 100 schools; and more than 80 digital village solutions have been implemented.

Energy network business: New energy business, new energy management and maintenance business is growing rapidly as the number of new energy power plants connected to the grid increases; the virtual power plant business continues to expand, and the company's RundoBidder virtual power plant digital scheduling platform won the first prize in the 6th “Blooming Cup” 5G Application Competition Guangdong Regional Competition and the National Finals Excellence Award; in the field of communications and integrated energy, the penetration rate of green energy, energy saving, and energy storage services for operators continues to increase, providing operators in many places with integrated wind storage applications, as well as comprehensive energy-saving renovation plans for aircraft buildings and computer rooms, to greatly assist operators in various regions Reduce energy consumption for network operation.

Profit forecasting and valuation

The company is a leader in private communications operations and maintenance in China. The communications and information network business is growing steadily, and the energy network business has achieved a high growth rate, creating a new growth point for computing power leasing. Considering the phased impact of the short-term digital business, we lowered our profit forecast. It is estimated that the company's net profit from 2023-2025 will be 522 million yuan/790 million yuan/1,013 million yuan, corresponding to PE of 20/13/10 times, respectively, maintaining the buying rating. Risk Alerts

Operator capital expenses fall short of expectations; risk of gross margin falling short of expectations; risk that sales of own data centers fall short of expectations; development of computing power leasing business falls short of expectations, etc.