Digital China(SZ:000034) CAITONG SECURITIES·2024-08-31 01:23Investment Rating - The investment rating for the company is "Accumulate" (maintained) [1] Core Views - The company is experiencing rapid growth in AI and chip-related revenues, driven by its AI-driven cloud integration strategy [4][5] - The company reported a revenue of 62.562 billion yuan for the first half of 2024, a year-on-year increase of 12.52%, and a net profit attributable to shareholders of 509 million yuan, up 17.52% year-on-year [4] - The second quarter of 2024 saw a significant acceleration in growth, with revenue increasing by 16.87% compared to 7.95% in Q1, and net profit growth accelerating to 22.35% from 12.35% in Q1 [4] - The company’s self-branded revenue reached 2.659 billion yuan in H1 2024, a 45.54% increase year-on-year, with AI server revenue soaring by 273.3% [4] - The company is positioned to benefit from the rapid growth of domestic computing power, leveraging its partnership with Huawei and its own sales channels and cloud service capabilities [5] Financial Performance Summary - For H1 2024, the company achieved a gross margin of 4.5%, an increase of 0.75 percentage points year-on-year [4] - The company’s projected revenues for 2024-2026 are 124.495 billion yuan, 131.179 billion yuan, and 139.614 billion yuan, with net profits expected to be 1.397 billion yuan, 1.667 billion yuan, and 1.997 billion yuan respectively [5] - The company’s PE ratios are projected to be 12x, 10x, and 8x for the years 2024, 2025, and 2026 respectively [5] - The company’s revenue growth rates are expected to be 4.07%, 5.37%, and 6.43% for the years 2024, 2025, and 2026 respectively [6]