Event Overview: The company released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved operating income of 14.353 billion yuan, a year-on-year increase of 10.34%; net profit to mother of 1,836 billion yuan, an increase of 18.88%; net profit after deducting non-return to mother was 1,278 billion yuan, an increase of 10.98% year-on-year. In the first quarter of 2024, the company achieved operating income of 2,479 billion yuan, an increase of 7.86% year on year; net profit to mother was 143 million yuan, up 8.86% year on year; net profit after deducting non-return to mother was 57 million yuan, an increase of 16.00% year on year.
Help AI to implement segmented scenarios and build a software and hardware ecosystem in a trinity. 1) AI technology software stack DAS:
DAS is the core of the Shuguang software ecosystem. It aims to provide convenient and efficient intelligent computing solutions for tens of millions of customers. Relying on basic hardware systems and development tool stacks, combined with reserved high-efficiency operator libraries, frameworks and components, it further enhances AI full-stack optimization capabilities. 2) Shuguang AI model warehouse: Open source code download for more than 100 models, innovate the “algorithm sharing x computing power support” model, and create an easy to use, quick adaptation, stable and efficient user experience, and build an easy-to-use and efficient large model platform for developers in thousands of industries. 3) Nationwide integrated computing power service platform: Connect various computing power infrastructure resources through the Internet and establish an innovative computing power service platform oriented by application services to lower the user usage threshold, raise the level of computing power application, and provide “services integrating computing power, data, application, operation, operation and maintenance” for thousands of industries. 4) “Three-dimensional computing”: building three-dimensional computing power, empowering three-dimensional applications, and three-dimensional ecological symbiosis to accelerate the transformation of computing power into productivity, thereby unleashing the development power of various industries and regions; the 5A intelligent computing center in Changsha took the lead. The center has attracted hundreds of enterprises to enter the joint construction and achieve access to more than 10,000 commercial applications. In the future, the company will use Changsha as a starting point to unleash the development power of thousands of industries and continue to promote the prosperity of the computing industry.
Liquid cooling data center solutions lead the industry, and the integration of storage and computing creates core competitiveness. 1) Liquid cooling data center solutions: The subsidiary Shuguang Digital Innovation has built the SLiquid technology brand and the overall CloudBase data center solution brand; according to Cidi Consultants' “2023 China Liquid Cooling Application Market Research Report”, from 2021 to 2023, Shuguang Digital had an average market share of 58.8%, ranking first in the liquid cooling data center infrastructure market in China, and has built the largest liquid cooling data center full-chain industry innovation base in Qingdao. 2) Storage: According to the “China Advanced Storage Development Research Report” published by CCID, Shuguang Storage takes the lead in each of the four indicators of data fluidity, security, reliability, and technology foresight, and ranks first among Chinese manufacturers in terms of comprehensive strength. 3) Integrated storage and computing: successfully deployed the industry's first single-stack liquid-cooled data center - the South China University of Technology liquid-cooled data center.
Investment advice: The company actively embraces the AI market and launched software products such as DAS and AI model warehouses. With technology accumulation in storage, liquid cooling, cloud computing, etc., it is leading the industry in the liquid-cooled data center infrastructure market, and is expected to usher in a period of rapid development under the AI trend. The company's net profit for 2024-2026 is estimated to be 23.16/29.25/3.363 billion yuan, corresponding PE is 29X, 23X, and 20X respectively, maintaining the “recommended” rating.
Risk warning: The development process of AI technology falls short of expectations; the risk of increased competition in the industry.