Digital China(SZ:000034) Changjiang Securities·2024-09-23 02:39Investment Rating - The investment rating for the company is "Buy" and is maintained [7]. Core Views - The company reported a total revenue of 625.62 billion yuan for the first half of 2024, representing a year-on-year increase of 12.52%. The net profit attributable to shareholders was 5.09 billion yuan, up 17.52% year-on-year. In the second quarter of 2024, the revenue reached 332.91 billion yuan, a 16.87% increase year-on-year, with a net profit of 2.74 billion yuan, up 22.35% year-on-year [2][6]. - The company's IT distribution and value-added services are stable, with high growth in proprietary brands and digital cloud services. The optimization of the business structure has contributed to an increase in gross profit margin, and the company continues to invest in research and development to drive technological innovation and product upgrades. Under the trends of digitalization, intelligence, and localization, the company is advancing its AI-driven digital cloud integration strategy, which is expected to achieve steady and rapid growth [2][6][7]. Summary by Sections Financial Performance - For the reporting period, the company achieved total revenue of 625.62 billion yuan, a year-on-year increase of 12.52%. The net profit attributable to shareholders was 5.09 billion yuan, up 17.52% year-on-year. Excluding the negative impact from the Shenzhen Digital International Innovation Center (IIC), the net profit growth was 37.2% [6][7]. - The IT distribution and value-added services generated revenue of 598.3 billion yuan, a 9.8% increase year-on-year. The microelectronics segment achieved revenue of 97.6 billion yuan, a 39.7% increase, driving the overall recovery of the distribution business [6][7]. - Proprietary brand products generated revenue of 26.6 billion yuan, a 45.5% increase, with a gross margin of 10.5%, up 1.7 percentage points year-on-year. The self-owned brand products have achieved good profitability, with the Xinchuang business revenue reaching 21.9 billion yuan, a 73.3% increase [6][7]. Business Strategy - The company is focusing on optimizing its business structure, which has helped improve the gross profit margin, with a sales gross margin increase of 0.75 percentage points to 4.45%. The growth in high-margin proprietary brands and digital cloud services has contributed to this improvement [6][7]. - The company is committed to continuous R&D investment to promote technological innovation and product upgrades. The "Shenzhou Wenxue" initiative is driving the upgrade of the digital cloud integration strategy, accelerating the deep integration of AI applications with various industries [6][7]. Future Outlook - The company is expected to achieve net profits of 13.8 billion yuan, 16.3 billion yuan, and 19.0 billion yuan for the years 2024 to 2026, corresponding to price-to-earnings ratios of 12, 10, and 9 times, respectively [7].