Digital China(000034) 民生证券·2024-09-02 12:46Investment Rating - The report maintains a "Recommended" rating for the company [2]. Core Insights - The company achieved a revenue of 62.562 billion yuan in the first half of 2024, representing a year-on-year growth of 12.52%, and a net profit attributable to shareholders of 509 million yuan, up 17.52% year-on-year [1]. - The core business continues to perform well, with Q2 2024 showing revenue and net profit growth rates of 17% and 22% respectively [1]. - The company's self-branded product business saw a strong revenue increase of 45.5%, reaching 2.66 billion yuan, with a gross margin of 10.5% [1]. - The domestic demand for localization continues to grow, with the company being a core partner of Huawei in the Kunpeng and Ascend AI computing sectors, leading to a 73.3% year-on-year revenue growth in the Xinchuang business, totaling 2.19 billion yuan [1]. - The AI-driven cloud integration strategy is being actively pursued, with the cloud service and software business achieving a revenue of 1.44 billion yuan, up 62.7% year-on-year [1]. - The company is positioned to benefit from the AI wave and is expected to enter a period of accelerated growth, with projected net profits for 2024-2026 being 1.415 billion, 1.687 billion, and 1.868 billion yuan respectively [1]. Financial Summary - In the first half of 2024, the company reported a total revenue of 62.562 billion yuan and a net profit of 509 million yuan, with a significant increase in the Xinchuang business [1]. - The company’s revenue from IT distribution and value-added services reached 598.3 billion yuan, with a gross margin of 3.5% [1]. - The financial forecast indicates a steady growth trajectory, with expected net profits increasing from 1.415 billion yuan in 2024 to 1.868 billion yuan in 2026, corresponding to PE ratios of 11X, 10X, and 9X respectively [2][5].