Tianfeng Securities·2024-10-25 05:03Investment Rating - The investment rating for the company is "Buy" with a 6-month outlook [1][5]. Core Views - The company reported a revenue of 90.04 billion yuan for the first three quarters of 2024, a year-on-year increase of 0.7%, and a net profit attributable to shareholders of 7.91 billion yuan, up 0.8% year-on-year [1]. - The domestic operator business is under pressure, but effective cost control measures are in place, and the deepening of "connection + computing power" is aiding AI development [1][2]. - The company is focusing on research and development, with R&D expenses amounting to 18.64 billion yuan, representing 20.7% of revenue, which supports technological innovations in 5G-A, optical networks, and AI solutions [4]. Summary by Sections Financial Performance - For Q3 2024, the company achieved a revenue of 27.557 billion yuan, a decline of 3.94% year-on-year, and a net profit of 2.174 billion yuan, down 8.23% year-on-year [1]. - The gross margin for the first three quarters was 40.43%, a decrease of 3.24 percentage points compared to the same period last year [3]. Business Segments - The domestic operator network business is facing challenges due to the investment environment, while international markets continue to grow at double-digit rates [2]. - Consumer and government enterprise businesses have shown rapid growth, benefiting from demand for computing power and connectivity [2]. Cost Management - The company has successfully reduced sales, management, and R&D expenses year-on-year, indicating effective cost control [3]. - Financial expenses increased due to exchange rate fluctuations, but impairment losses have significantly narrowed, reflecting improved cost management [3]. Research and Development - The company is committed to R&D, with significant investments aimed at enhancing its capabilities in AI and telecommunications [4]. - Innovations include the launch of AI servers compatible with mainstream GPUs and the development of self-researched large models for various applications [4]. Profit Forecast and Investment Advice - The operator business is expected to stabilize in the short term, while the government enterprise business is projected to accelerate growth due to demand for computing power and connectivity [5]. - The company’s revenue is anticipated to remain stable, with improved profitability expected from effective cost management [5].