KAIYUAN SECURITIES·2024-02-07 16:00Investment Rating - The investment rating for the company is "Buy" (maintained) as of February 6, 2024 [1]. Core Views - The company is a global leader in the ICT field, leveraging its comprehensive communication and information technology solutions to build a robust digital foundation focused on "connection + computing power" [4][10]. - The company is expected to see significant growth in its second curve business, represented by computing power products, as it capitalizes on the AI wave and accelerates its transition to 5G-A [5][18]. - The company has a strong R&D capability, with a cumulative investment exceeding 140 billion yuan over the past decade, positioning it well for future growth in various new application areas [6][39]. Summary by Sections Company Overview - The company is recognized as a leading provider of end-to-end ICT solutions, with a strong focus on operator networks, government enterprise business, and consumer products [10]. - It has maintained a significant market share in the global telecommunications equipment sector, ranking among the top four providers [12]. Financial Performance - The company's revenue has shown a compound annual growth rate (CAGR) of 9.5% from 2018 to 2022, with total revenue increasing from 85.51 billion yuan to 122.95 billion yuan [18]. - For 2023, the company expects a net profit of 9.36 billion yuan, with projected earnings per share (EPS) of 1.96 yuan, corresponding to a price-to-earnings (P/E) ratio of 11.79 [4][7]. Business Segments - The operator network segment has seen steady growth, with revenue increasing from 57.08 billion yuan in 2018 to 80.04 billion yuan in 2022, reflecting a CAGR of 8.82% [20]. - The government enterprise business has also expanded, with revenue rising from 9.23 billion yuan in 2018 to 14.63 billion yuan in 2022, achieving a CAGR of 12.21% [20]. R&D and Innovation - The company has consistently ranked first in R&D investment within the A-share communication, electronics, media, and computer sectors, with a R&D expenditure of 21.32% of revenue in 2023 [39]. - It has launched several new products, including the G5 series servers and AI models, to enhance its competitive edge in the computing power market [46][50]. Market Trends - The company is well-positioned to benefit from the growing demand for AI and computing power infrastructure, with the AI server market expected to reach 91 billion USD in 2023, growing by 82.5% year-on-year [44]. - The transition to 5G-A is anticipated to create new growth opportunities, with the company actively participating in various 5G-A projects and technology validations [34][55].