Sugon(603019) 华龙证券·2024-11-09 09:43Investment Rating - The report maintains a "Buy" rating for Sugon (603019 SH) [1] Core Views - Sugon achieved steady growth in revenue and net profit in Q3 2024 with total revenue of 8 041 billion yuan up 3 65% YoY and net profit attributable to shareholders of 770 million yuan up 2 57% YoY [1] - The company increased R&D investment by 14 49% YoY in the first three quarters of 2024 focusing on long-term R&D achievements [1] - Sugon is expected to benefit from the domestic substitution wave in the computing industry with its comprehensive product portfolio covering high-end computers storage security and data center products [1] - The company has invested in multiple high-quality assets forming a full industry chain layout from chips to cloud computing and is expected to strengthen its industry leadership through business synergies [1] Financial Performance - In Q3 2024 Sugon's revenue was 2 329 billion yuan down 1 19% YoY while net profit attributable to shareholders was 206 million yuan up 0 41% YoY [1] - The company's revenue for 2024E is forecasted to be 16 190 billion yuan with a YoY growth of 12 8% and net profit attributable to shareholders is expected to reach 2 159 billion yuan up 17 6% YoY [2] - Sugon's EPS for 2024E is projected to be 1 48 yuan with a P/E ratio of 36 8x [2] Industry and Competitive Position - The domestic computing industry is accelerating driven by AI and localization trends with Sugon positioned as a leading player in the domestic computing power sector [1] - Sugon's valuation is higher than peers such as Inspur Information (000977 SZ) and Unisplendour (000938 SZ) reflecting its leading position in the industry [2] Future Outlook - The report forecasts Sugon's net profit attributable to shareholders for 2024-2026 to be 2 159 billion yuan 2 616 billion yuan and 3 166 billion yuan respectively with EPS of 1 48 yuan 1 79 yuan and 2 16 yuan [2] - The company's ROE is expected to increase from 10 4% in 2024E to 12 1% in 2026E indicating improving profitability [5]