Digital China(SZ:000034) Tianfeng Securities·2024-09-04 08:43Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected relative return of over 20% within the next six months [6][14]. Core Insights - The company achieved significant revenue growth in Q2, with a year-on-year increase of over 22% in net profit, driven by the success of its AI-driven cloud integration strategy [1][2]. - The company's self-branded products saw a robust revenue increase of 45.5%, with its AI server business benefiting from the high demand for domestic computing power [3][4]. - The financial forecast has been adjusted downwards due to the stable nature of the IT distribution business and the negative impact from the Shenzhen Digital International Innovation Center [4]. Financial Performance Summary - In the first half of 2024, the company reported revenue of 625.62 billion yuan, a year-on-year increase of 12.52%, and a net profit of 5.09 billion yuan, up 17.52% [1]. - For Q2 2024, revenue reached 332.91 billion yuan, reflecting a year-on-year growth of 16.87% and a quarter-on-quarter increase of 13.73% [1]. - The AI-driven cloud services and software business generated 14.4 billion yuan in revenue, marking a 62.7% year-on-year increase [2]. - The self-branded product revenue was 26.6 billion yuan, with a gross margin of 10.5%, and the AI server revenue surged to 5.6 billion yuan, a remarkable growth of 273.3% [3]. Financial Forecast and Valuation Analysis - The revised revenue projections for 2024-2026 are 1268.97 billion yuan, 1351.07 billion yuan, and 1440.78 billion yuan, respectively [4]. - The expected net profit for the same period is projected at 14.01 billion yuan, 16.72 billion yuan, and 20.13 billion yuan [4]. - Key financial metrics include an EPS of 2.09 yuan for 2024, with a P/E ratio of 12.33 [5][10].