1. Release the AI development strategy and fully transform into an AI industry model and computing power service provider

In the process of communications, information, energy management, and operation and maintenance, Runjian Co., Ltd. has accumulated a large number of industry segmentation scenarios and requirements, and these scenarios and requirements all require the support of AI algorithms, including computer vision, natural language understanding, etc., providing a large number of vertical industry data resources for independent development and training of the company's artificial intelligence platform.

On July 24, 2023, the company released a white paper on artificial intelligence strategy and a new AI product - Runjian “Curved Scale” Artificial Intelligence Open Platform, which means that the company has completely transformed into an AI industry model and computing power service provider. Based on computing power services and data services, it forges industry models, products and solutions with core competitiveness through the company's self-developed “curve scale” generative artificial intelligence industry model development platform to help communication, information and energy network management enter the AI “smart” era.

The “Curve” platform is an open platform for artificial intelligence developed by Runjian Co., Ltd. based on a deep learning framework. It introduces large language model capabilities, focuses on generating artificial intelligence algorithms in the fields of vision, speech, and text, and accelerates the construction of various industry solutions integrating software and hardware. Relying on the company's long-term accumulation in the fields of communication, energy, and information network management and maintenance, the platform provides industry developers with convenient and easy-to-use development tools, enabling them to easily build artificial intelligence applications in vertical fields.

Runjian Co., Ltd. and Baidu Intelligent Cloud have signed a strategic cooperation agreement. The two sides will cooperate to jointly launch products and solutions based on Baidu Intelligent Cloud's Qianfan Big Model Platform. Carry out in-depth cooperation in the fields of market expansion, integrated development, implementation and delivery, operation and maintenance, etc., to jointly promote large-scale model technological innovation and industry application implementation. Runjian Co., Ltd. will combine Baidu's Wenxin large-scale model capabilities to build industry models and scenario applications for management maintenance and digitalization of government and enterprise on the “curve scale” platform.

The artificial intelligence strategy of Runjian Co., Ltd. is basically positioned to focus on AI industry model service and implementation. It will use cloud, edge, and end computing resources as the main support base, industry data and customer service data accumulated over many years as the training foundation for the industry model, and open “curve scale” platforms, algorithms, and large partner models as ecological links, focusing on the industry to forge industry models with core competitiveness, and empowering the application and implementation of more scenario models.

2. Computing power leasing: High-specification data centers carry computing power layout and continue to invest in top computing power servers

The company's computing power services mainly include computing power leasing business and computing power management and maintenance services. In the computing power leasing service business, the company plans to build a very large data center with a total scale of 20,000 cabinets with an average power of 6KW - the “Wuxiang Cloud Computing Center”, with a total investment of about 3.6 billion yuan. At present, the first phase of the project has completed the construction of 6,000 cabinets with an average power of 6KW. On the basis of cloud computing services, the company further upgraded computing power services. The first stage invested 200 million yuan to purchase top computing power servers in the industry to build a smart computing power center for Runjian Co., Ltd., providing up to 2533Pops (Int8) fixed-point computing power or 43Pflops (FP32) single-precision floating-point computing power and supporting cloud storage. After completion, it mainly provides AI big model training, inference computing power, and graphic rendering computing power services. It serves big models of artificial intelligence, industry models, etc., and continues to invest according to subsequent developments. The first phase of the Wuxiang Cloud Valley project can carry up to 6,000 computing power servers equipped with NVIDIA H800 SXM cards; it can carry up to 3216P single-precision floating-point computing power and 189,984P Int8 fixed-point computing power output.

According to the notes of the company's investor relations activities in November '23, the company continues to invest more in computing power services. The first phase of the Intelligent Computing Center will provide customers with about 2500P computing power leasing services, and will continue to invest according to customer needs in the future. The Intelligent Computing Power Center of Runjian Co., Ltd. is a new type of public infrastructure for multiple actors throughout society in the intelligent era. After completion, it mainly provides AI big model training, reasoning computing power, and graphic rendering computing power services, serving big artificial intelligence models, industry models, etc.

After testing and debugging, the NVIDIA NVLINK H800/NVIDIA NVLINKA800 computing power server, the intelligent computing power center of Runjian Co., Ltd., was officially launched in batches and delivered to users in October '23. The launch of high-performance computing power servers marks the official opening of the Intelligent Computing Center of Runjian Co., Ltd. Currently, the company's channels and customers have diversified, and high-performance computing power servers will be launched and put into use at an accelerated pace. Subsequent companies will further deepen partnerships with major partners such as Huawei, procure various brands and types of computing power servers, and promote the further construction of the Intelligent Computing Center of Runjian Co., Ltd.

3. Computing power operation and maintenance: providing an intelligent operation and maintenance platform for computing power centers

The company also provides integrated management and maintenance services for computing power centers, including computing power construction and computing power operation and maintenance. It is committed to improving the operating efficiency of computing power centers, providing intelligent operation and maintenance platforms for computing power centers, integrating original dynamic loop monitoring systems, network management systems, and AI computing platforms to create an integrated operation and maintenance management platform, which has a good replication effect.

The company has recently launched several supercomputing center projects such as the China-ASEAN Artificial Intelligence Supercomputing Center Project, the Fujian Multi-Station AI Supercomputing Big Data Center, and the Guangdong-Hong Kong-Macao Greater Bay Area Intelligent Computing Center.

The “curve ruler” helps the management and maintenance of communication, information, and energy networks enter the “smart” era of AI. Runjian Co., Ltd. not only has accumulated massive data for more than 20 years in the field of communication, information and energy network management and maintenance, but also has accumulated technology, products, and R&D experience in AI applications. The “curve scale” platform is already providing AI capabilities for various scenarios such as target detection, behavior detection, video optimization, environmental risk, IoT device status, network regulation and network optimization, and object recognition for management and maintenance services.

4. Actively expand overseas markets. Computing power procurement and overseas cooperation have been reached. In recent years, Runjian Co., Ltd. has accelerated the layout of overseas markets, promoted the company's self-developed technology and rapid industrialization and promotion of achievements overseas, and participated in international advanced technology research, development, introduction and application. Currently, Runjian Co., Ltd. has successfully installed park data centers in the Philippines, Vietnam, Indonesia and other countries, and has upgraded the data centers of various enterprises in various countries. In addition, Runjian Co., Ltd. continues to promote cloud computing and big data center construction for the “digital silk road”, continues to expand end-to-end capabilities, and provides one-stop service for the entire life cycle of data centers to overseas regions. The company has accumulated 100+ external ecological partners through project services, built an ecological partner circle, and continues to “take root and create brands and lay out ASEAN”. It has built end-to-end capabilities for “market expansion, project delivery, and service support” in the ASEAN region, and has implemented a series of projects including digital business, data centers, new energy, and overseas warehousing and logistics.

In November '23, Runjian Co., Ltd. reached a strategic cooperation with Juwei Group and Jinkang International. The three parties will establish in-depth strategic cooperation in the fields of investment, construction, operation, operation and maintenance of computing power centers, and artificial intelligence applications to jointly promote innovation and development in the field of artificial intelligence industry.

Juwei Group is a Malaysian group company that mainly focuses on investments that can drive economic growth, and cooperates closely with other countries in Asia in various fields of the digital economy in the context of the Regional Comprehensive Economic Partnership Agreement (RCEP).

Jinkang International is a joint venture between China Silk Road Group and Juwei Group in Malaysia. It mainly serves enterprises and markets in countries along the Belt and Road, and strives to promote trade and economy in various countries, so that it can achieve mutual benefits for all countries as a whole.

The main contents of this strategic cooperation between the parties include:

1. The three parties make full use of their respective resource advantages and technological innovation advantages, invest in the construction of computing power centers in Malaysia and other countries, build cloud nodes and computing power nodes radiating ASEAN, and plan to build about 1000P computing power services in the first phase.

2. Leveraging their respective technology research and development advantages and marketing resource advantages, the three parties establish comprehensive and close strategic partnerships around artificial intelligence applications, digital industry, computing power services, etc., jointly develop computing power derivative service business, and jointly build a large AI model service center for ASEAN.

3. The three parties make full use of their respective resources and channel advantages to cooperate in computing power procurement, etc.

This strategic cooperation will further deepen technical exchanges and cooperation between Runjian Co., Ltd. and Malaysia. Through the joint construction and sharing of superior resources and technical capabilities, the three parties will invest in the construction of computing power centers in Malaysia and other countries, build cloud nodes and computing power nodes radiating ASEAN, jointly develop computing power derivative service services, and jointly build a large AI model service center for ASEAN, helping to promote the flourishing development of the China-ASEAN digital economy.

Profit forecast, valuation and rating: Maintain the company's profit forecast of 523 million/654 million/852 million yuan of net profit for the year 23-25. The corresponding PE is 26X/21X/16X, respectively. Considering that the results of the company's future AI strategy development strategy will gradually show, the computing power service business has huge market space, and the three main businesses (information networks, communication networks, and energy networks) will benefit deeply from the AI layout, and future growth is good, the company is expected to enjoy Davis's double click and maintain its “buy” rating.

Risk warning: operators' network operation and maintenance expenses are lower than expected, the risk of the technology game between China and the US, increased market competition, and increased labor costs.