Digital China(SZ:000034) Dongguan Securities·2025-04-15 06:43Investment Rating - The report maintains a "Buy" rating for the company, indicating an expected stock performance that will exceed the market index by more than 15% over the next six months [7]. Core Insights - In 2024, the company achieved a revenue of 128.17 billion yuan, representing a year-on-year growth of 7.14%. However, the net profit attributable to shareholders decreased by 35.77% to 7.53 billion yuan. After excluding the negative impact from the Shenzhen Digital International Innovation Center (IIC), the net profit was 13.05 billion yuan, showing positive growth [2][4]. - The company's IT distribution and value-added services generated a revenue of 1244.51 billion yuan, up 6.84% year-on-year. The proprietary brand products business saw a revenue increase of 20.25% to 45.81 billion yuan, while the cloud services and software business grew by 18.75% to 29.65 billion yuan [4][5]. - The company has made significant strides in its AI-driven cloud services, particularly in the automotive sector, signing contracts with 18 strategic automotive enterprises in 2024. Additionally, the company has expanded its partnerships with major cloud service providers and launched an AI-native empowerment platform [4][5]. Summary by Sections Financial Performance - In 2024, the company reported total revenue of 1281.66 billion yuan, a 7.14% increase year-on-year. The net profit attributable to shareholders was 7.53 billion yuan, down 35.77%, while the net profit after excluding the IIC impact was 13.05 billion yuan, maintaining positive growth [2][4]. - The gross profit margin for 2024 was 4.21%, an increase of 0.22 percentage points year-on-year, while the net profit margin was 0.61%, a decrease of 0.4 percentage points [4]. Business Segments - The IT distribution and value-added services segment generated 1244.51 billion yuan in revenue, a 6.84% increase year-on-year. The proprietary brand products segment achieved 45.81 billion yuan, up 20.25%, and the cloud services and software segment reached 29.65 billion yuan, growing 18.75% [4][5]. Future Outlook - The company is expected to benefit from its deep integration with the Huawei supply chain, particularly in the context of the emerging trends in AI and computing power. The projected earnings per share (EPS) for 2025 and 2026 are 1.76 yuan and 2.32 yuan, respectively, with corresponding price-to-earnings (PE) ratios of 21 and 16 [4][5].