Digital China(000034) 华龙证券·2024-09-03 13:30Investment Rating - The report maintains a "Buy" rating for the company, citing its strong performance in IT distribution, self-branded products, and cloud services, with a valuation lower than the industry average [4][7] Core Views - The company's 2024H1 performance slightly exceeded expectations, with revenue growing by 12.5% YoY and net profit attributable to shareholders increasing by 17.5% YoY (37.2% YoY excluding the impact of IIC) [2] - IT distribution business remains stable, with revenue reaching 59.83 billion yuan, a 9.8% YoY increase, and gross margin improving by 0.3% [2] - Self-branded products and cloud services grew significantly, driven by the AI and domestic innovation (Xinchuang) trends, with revenue increases of 45.5% and 62.7% YoY, respectively [2] - The company's AI server business, particularly the Shenzhou Kuntai AI server, achieved a 273.3% YoY revenue growth, indicating strong potential for future growth [2] Financial Performance and Forecasts - The company's 2024-2026 net profit attributable to shareholders is forecasted to be 1.416 billion yuan, 1.730 billion yuan, and 2.114 billion yuan, respectively, with corresponding P/E ratios of 11.6x, 9.5x, and 7.8x [4][5] - Revenue is expected to grow steadily, with 2024-2026 revenue forecasts of 127.003 billion yuan, 134.447 billion yuan, and 142.620 billion yuan, representing YoY growth rates of 6.17%, 5.86%, and 6.08%, respectively [5] - Gross margin is projected to improve slightly, from 3.92% in 2022 to 4.86% in 2026, driven by the growth of high-margin self-branded and cloud services [5][10] Business Highlights - The company successfully introduced domestic semiconductor brands like Huawei HiSilicon, leveraging its leading position in IT distribution to capitalize on the domestic computing power trend [2][4] - The cloud services and software business achieved a 62.67% YoY revenue growth and a 6.82% YoY increase in gross margin, supported by the company's strategic focus on generative AI and data asset management [2] - The company's AI server business is expected to benefit from the acceleration of Xinchuang tenders, with significant revenue growth potential [2][4] Industry Comparison - The company's valuation is lower than the industry average, with 2024-2026 P/E ratios of 11.6x, 9.5x, and 7.8x, compared to the industry average of 26.0x, 22.2x, and 19.3x [4][7] - Key competitors include Aisidi (002416.SZ), Shenzhen Huaqiang (000062.SZ), and Inspur Information (000977.SZ), with the company showing stronger growth potential in self-branded and cloud services [4][7]