Digital China(SZ:000034) Ping An Securities·2024-09-02 23:30Investment Rating - The report maintains a "Recommended" investment rating for the company [2][7]. Core Views - The company experienced steady growth in the first half of 2024, with accelerated performance in the second quarter compared to the first quarter [5][7]. - The company achieved operating revenue of 62.562 billion yuan, 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 [5][7]. - The growth in revenue was driven by the IT distribution and value-added services, which generated 59.832 billion yuan, a 9.84% increase, and the proprietary brand products, which saw a 45.54% increase to 2.659 billion yuan [5][7]. - The company’s gross profit margin improved to 4.45%, an increase of 0.75 percentage points year-on-year, with significant improvements in the gross margins of its main business segments [5][7]. Summary by Sections Financial Performance - In the first half of 2024, the company reported operating revenue of 62.562 billion yuan, a 12.52% increase year-on-year, and a net profit of 5.09 billion yuan, up 17.52% year-on-year [5][7]. - The second quarter saw revenues of 33.291 billion yuan, a 16.87% increase year-on-year, and a net profit of 2.74 billion yuan, a 22.35% increase year-on-year [5][7]. Business Segments - The IT distribution and value-added services segment generated 59.832 billion yuan, a 9.84% increase year-on-year, while the proprietary brand products segment achieved 2.659 billion yuan, a 45.54% increase [5][7]. - The cloud services and software business reported revenue of 1.44 billion yuan, a 62.67% increase year-on-year [5][7]. Profitability and R&D - The company’s gross profit margin improved to 4.45%, with the IT distribution and value-added services margin at 3.5%, proprietary brand products at 10.5%, and cloud services at 19.1% [5][7]. - R&D expenditures totaled 1.9 billion yuan, with 1.7 billion yuan being expensed and 0.2 billion yuan capitalized, reflecting the company's commitment to innovation [7]. Future Outlook - The company is expected to benefit from the trends of enterprise cloud adoption and digital transformation, as well as the growth in the AI and digital innovation sectors [7]. - The adjusted profit forecasts for 2024-2026 are 1.409 billion yuan, 1.732 billion yuan, and 2.135 billion yuan respectively, with corresponding EPS of 2.10 yuan, 2.59 yuan, and 3.19 yuan [7].