Event Overview:
Recently, Zhongke Shuguang released the “2024 Semi-Annual Report”. In the first half of the year, the company achieved operating income of 5.712 billion yuan, an increase of 5.77% year on year; realized net profit of 0.563 billion yuan, an increase of 3.38% year on year; net profit after deducting non-return to mother was 0.366 billion yuan, an increase of 20% year on year. The operating income is consistent with the previously published performance report. Both net profit to mother and net profit after deduction to mother are higher than the data in the performance report.
The business maintained high-quality development in the first half of the year. The product, marketing and project sides each had highlights. According to Q2, the company's revenue was 3.233 billion yuan (YoY +4.19%), net profit attributable to mother was 0.421 billion yuan (YoY +1.69%), and net profit after deducting non-return to mother was 0.31 billion yuan (YoY +21.09%).
By business, IT equipment revenue was 5.126 billion yuan (YoY +3.98%); revenue from software development, system integration, and technical services surrounding high-end computers was 0.584 billion yuan (YoY +24.79%).
The comprehensive gross margin was 26.25% (YoY+0.21pct), and the sales/management/R&D expenses ratio was 6.04%/2.63%/10.94%, respectively, +0.56/+0.03/+0.12pct.
The company's investment income in the first half of the year was 0.223 billion yuan (YoY +37.25%), mainly due to an increase in the net profit of joint ventures. In the first half of 2024, the joint venture Haiguang Information achieved operating income of 3.763 billion yuan (YoY +44.08%), net profit of 0.853 billion yuan (YoY +25.97%); net profit after deducting non-return to mother of 0.818 billion yuan (YoY +32.09%). The overall operating indicators continued to grow. The industrial ecosystem mainly related to high-end processor products continued to expand, and the industry applications involved and the emerging artificial intelligence model industry gradually increased.
According to the semi-annual report, during the reporting period, the company developed high-end computer products such as submerged liquid-cooled blades and artificial intelligence workstations; accelerated the introduction of domestic core components, explored the best networking practices and optimal high-performance storage ratios to enhance system stability; the marketing side grasped the localization needs of key industries, enhanced sales force building, cooperated with industry ISVs to expand market share; and participated in the construction of intelligent computing center projects in various regions with the new idea of “three-dimensional computing” to provide all regions with computing infrastructure solutions integrating planning consulting, system design, engineering construction, operation and maintenance services, and energy consumption management.
Focus on elements such as computing power, software, and platforms to build a computing power service entire industry chain ecosystem
In the first half of 2024, the company released FlashNexus, a full-stack centralized storage system developed by itself, to meet the high-performance storage needs of key business systems such as finance and telecommunications, and upgrade distributed all-flash storage to meet artificial intelligence storage requirements; develop an AI technology software stack DAS platform to enhance AI full-stack optimization capabilities. The platform provides multi-level computing services from basic operators and framework tools to extended components to help the migration, development and iteration of AI applications; at the same time, it launched an AI model warehouse based on a domestic computing power platform, which supports the download and use of more than 100 refined models.
The company actively extends its layout to the computational ecosystem business. In addition to launching products and solutions such as storage, network security, big data, and cloud computing, and completing the “core—end—cloud-computing” industry chain layout, the company also invested in many high-quality assets such as Haiguang Information, Zhongke Star Map, Shuguang Digital Innovation, and Shuguang Cloud Computing. The company and participating holding companies cover everything from upstream chips, server hardware, and IO storage to midstream cloud computing platforms, big data platforms, computing power service platforms, and downstream cloud service providers.
The company's layout is to build a “national integrated computing power service platform”, linking various computing power infrastructure resources in many places to provide end-to-end full-stack computing power production, delivery and application support services for AI, scientific computing, industrial simulation, etc., to solve computing power output, transformation, matching and application problems, and accelerate the rapid implementation of artificial intelligence software and hardware collaboration and application scenarios. Through various operating models such as computing power operation, platform operation, and ecological operation, we promote a virtuous cycle of data, computing power, models, and applications, and enhance the commercial operation capabilities of intelligent computing centers. During the reporting period, the company actively participated in the construction and operation of computing power interconnection service platforms in cities such as Beijing, Chongqing, and Qingdao, and worked with partners to build efficient, diverse and inclusive computing power services.
Investment advice:
As a leading enterprise in core information infrastructure, Zhongke Shuguang is expected to benefit from the surge in computing power demand brought about by the wave of artificial intelligence, and as Haiguang's largest shareholder, it is expected to benefit from this. The company's revenue for 2024-2026 is estimated to be 16.139/18.829/22.314 billion yuan, and net profit to mother is 2.196/2.732/3.209 billion yuan, respectively. Maintaining a buy-A investment rating, a 6-month target price of 45.03 yuan is given, which is equivalent to a dynamic price-earnings ratio of 30 times in 2024.
Risk warning:
Data center construction fell short of expectations; competition in the high-end computer industry intensified.