Digital China(SZ:000034) Minsheng Securities·2025-09-01 04:53Investment Rating - The report maintains a "Recommended" rating for the company, with a current price of 44.84 CNY [5]. Core Insights - The company achieved a revenue of 71.59 billion CNY in the first half of 2025, representing a year-on-year growth of 14.4%. However, the net profit attributable to shareholders decreased by 16.3% to 430 million CNY [1][2]. - The IT distribution and value-added services segment generated 68.39 billion CNY in revenue, up 14.3%, driven by a 30.4% increase in the microelectronics business, which reached 12.1 billion CNY [1]. - Strategic business areas, including cloud services and software, saw revenue growth of 14.1% to 1.64 billion CNY, while proprietary brand products grew by 16.6% to 3.1 billion CNY [1]. Summary by Sections Financial Performance - The company's net profit for the first half of 2025 was 430 million CNY, down 16.3%, with a non-recurring net profit of 440 million CNY, a decrease of 4.1%. This decline was attributed to increased R&D investment in AI products, reduced government subsidies, and changes in the fair value of certain equity assets [2]. - The cash flow from operating activities reached 500 million CNY, marking a significant increase of 236.81% [2]. Strategic Developments - The cloud services and software business improved its profitability, achieving a gross margin of 21.4%, up 2.3 percentage points, with a net profit growth of 30.6% [2]. - The proprietary brand business saw a substantial increase in net profit, totaling 59.57 million CNY, a growth of 90.5%. New AI products were launched, focusing on private deployment for enterprises [3]. - The company invested 210 million CNY in R&D during the first half of 2025, a 10.6% increase, supporting advancements in AI applications and server technologies [3]. Future Outlook - The company is positioned as a leading server manufacturer in China, capitalizing on opportunities presented by the AI wave and actively pursuing strategic transformations in AI computing markets. The projected net profits for 2025-2027 are 1.259 billion CNY, 1.585 billion CNY, and 1.885 billion CNY, respectively, with corresponding P/E ratios of 26X, 20X, and 17X [3][4].