Digital China(SZ:000034) ZHONGTAI SECURITIES·2024-09-05 03:30Investment Rating - The investment rating for the company is "Buy" (maintained) [2][6] Core Views - The company achieved a revenue of 62.56 billion yuan in the first half of 2024, representing a year-on-year growth of 12.5%. The net profit attributable to shareholders was 510 million yuan, up 17.5% year-on-year. Excluding the negative impact from the Shenzhen Digital International Innovation Center, the net profit grew by 37.2% year-on-year [3] - The company is well-positioned in the IT distribution sector and is capitalizing on new opportunities in "cloud + innovation" with its "Digital Cloud Integration" solutions and competitive hardware products [3] - The forecast for net profit attributable to the parent company for 2024-2026 is 1.41 billion, 1.74 billion, and 2.12 billion yuan, respectively [3] Summary by Sections Financial Performance - Revenue (million yuan): 115,880 in 2022, projected to be 119,624 in 2023, 128,104 in 2024, 137,508 in 2025, and 149,239 in 2026 [2] - Net profit (million yuan): 1,004 in 2022, projected to be 1,172 in 2023, 1,410 in 2024, 1,739 in 2025, and 2,120 in 2026 [2] - Gross margin for the first half of 2024 was 4.45%, an increase of 0.75 percentage points year-on-year [3] Business Segments - IT Distribution and Value-Added Services: Revenue of 598.3 billion yuan, up 9.8% year-on-year, with a gross margin of 3.5% [3] - Proprietary Brand: Revenue of 26.6 billion yuan, up 45.5% year-on-year, with a gross margin of 10.5% [3] - Cloud Services and Software: Revenue of 14.4 billion yuan, up 62.7% year-on-year, with a gross margin of 19.1% [3] Market Position - The company maintains a leading position in the distribution of general and AI chips, with significant contributions from Huawei's HiSilicon [3] - The company won a major contract worth approximately 2 billion yuan from China Mobile for its AI server products [3] Valuation Metrics - P/E ratio is projected to decrease from 16.4 in 2022 to 7.8 in 2026 [2] - P/B ratio is projected to decrease from 2.2 in 2022 to 1.2 in 2026 [2]