Revenue in '23 was +47.9% YoY, after deducting non-net profit +134.2% YoY. Performance exceeded expectations.

Revenue for the year 23 was 4.658 billion yuan, +47.9% year on year, net profit to mother of 287 million yuan, +119.5% year on year, after deducting non-net profit of 275 million yuan, +134.2% year over year. Revenue growth mainly benefited from all-round business development and overseas layout. The gross profit margin for 23 years was 13.57%, +2.37pct year on year, 6.14% net profit margin, +1.99pct year on year, after deducting 5.90% non-net profit margin, +2.17pct year on year.

23Q4 revenue for a single quarter was 1.43 billion yuan, +2.9% month-on-month, net profit to mother was 91 million yuan, +10.5% month-on-month, after deducting non-net profit of 84 million yuan, +1.7% month-on-month. 23Q4 single quarter gross profit margin 13.90%, +0.75pct month-on-month, net profit margin 6.48%, month-on-month +0.62pct, net non-net interest rate 5.88%, -0.07pct month-on-month. The month-on-month decline in deducted non-net interest rates in the Q4 quarter was mainly due to the financial expense ratio +0.78pct month-on-month.

Data storage devices grew +70% year over year, and IoT smart terminals grew steadily +19% year over year.

By business: 1) The company's largest business is data storage equipment (solid state drives, mechanical hard drives, NAS memory, etc.). Its 23-year revenue was 2,876 billion yuan, +69.8% year-on-year, accounting for about 61.75% of total revenue, and a gross profit margin of 9.95%, +0.99 pct year over year, mainly benefiting from the recovery in 23H2 storage prices and rising demand.

2) The company's second-largest business is IoT smart terminals. Its revenue for 23 years was 1,405 billion yuan, +19.1% year over year, accounting for about 30.15% of total revenue, gross profit margin of 19.26%, and +6.27pct year on year.

Increase the layout of the storage+intelligent IoT cloud service industry chain, and open up new incremental space for server remanufacturing.

1) Storage business: The company has entered enterprise-grade storage and self-developed storage chips, and continuously increased investment in software and hardware integration; 2) Smart IoT business: the share of cloud video platform business and overseas smart security business has increased. The company continues to expand overseas markets, and customers in some fields have grown by more than 60%; 3) Server remanufacturing business: 23H2 has successively set up Co-Creation Data Shenzhen Yantian Branch and Co-Creation Data Bonded Branch. With the advent of AI infrastructure, demand for server remanufacturing continues to rise. Marketsandmarkets predicts that the IT asset disposal market will reach US$26.6 billion by 2029. The server remanufacturing business threshold is high. The company is expected to gain a card position advantage with the early layout, and there is plenty of room for performance growth.

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 for 2024-2026 is estimated to be 509/6.43/903 million yuan respectively, corresponding to the 24/25/26 PE of 28/22/16 times, maintaining the “increase” rating.

Risk warning: product development risks; risks of changes in the macroeconomic environment; global business risks; data security and user information protection risks of cloud platform services, etc.