Sugon(603019) 东方证券·2024-02-29 16:00Investment Rating - The report maintains a "Buy" rating for the company with a target price of 65.6 CNY, based on a projected 40 times price-to-earnings ratio for 2024 [3]. Core Views - The company reported a revenue increase of 10.4% to 14.35 billion CNY, with a net profit attributable to the parent company rising by 19% to 1.84 billion CNY. The fourth quarter is expected to show a revenue growth of 17.3% year-on-year and a net profit growth of 22.1% [1]. - The company has experienced a structural transformation in its business over the past three years, leading to stable revenue growth and a significant increase in profit due to improved gross margins and effective cost control. However, in 2023, the company faced weak downstream demand and rising R&D and sales expenses, resulting in profit growth aligning more closely with revenue growth [1]. - The outlook for 2024 is optimistic, with expectations of improved demand for general servers and a rebound in the "Xinchuang" (信创) sector. The development of generative AI models is anticipated to drive significant growth in intelligent computing demand [1]. - The company is actively building a national integrated computing power service platform, which is expected to provide advanced, green, and lossless computing services. While short-term revenue contributions may be limited, the long-term growth potential is viewed positively [1]. Financial Forecasts - The earnings per share (EPS) estimates for 2023-2025 have been adjusted to 1.26 CNY, 1.64 CNY, and 2.04 CNY, respectively, down from previous estimates of 1.43 CNY, 1.87 CNY, and 2.27 CNY. The company’s revenue and gross margin growth rates are now expected to be lower than previously anticipated [1][3]. - The projected revenue for 2023 is 14.34 billion CNY, with a year-on-year growth of 10.2%. For 2024 and 2025, revenues are expected to reach 16.43 billion CNY and 18.36 billion CNY, respectively, with growth rates of 14.6% and 11.7% [2].