FII(SH:601138) Huachuang Securities·2024-03-13 16:00Investment Rating - The investment rating for the company is "Strong Buy" (maintained) [2][10][17]. Core Views - The company's revenue for 2023 was CNY 476.34 billion, a year-over-year decrease of 6.94%, while the gross margin improved to 8.06%, an increase of 0.89 percentage points. The net profit attributable to shareholders was CNY 21.04 billion, reflecting a year-over-year increase of 4.82% [2][3]. - The demand for AI servers and switches has driven an improvement in the company's profitability, despite a challenging overall market for servers, which saw a global shipment decline of 18% in 2023 [2][3]. - The company has established partnerships with leading clients such as Microsoft, AWS, and NVIDIA, positioning itself to benefit from the growing AI server market, which is expected to reach USD 24.8 billion in 2023, with a growth rate of 27% [2][3]. Financial Summary - Total revenue for 2023 was CNY 476.34 billion, with a projected increase to CNY 517.38 billion in 2024, representing a growth rate of 8.6% [3][9]. - The net profit attributable to shareholders is expected to rise from CNY 21.04 billion in 2023 to CNY 24.03 billion in 2024, indicating a growth rate of 14.2% [3][9]. - The earnings per share (EPS) is projected to increase from CNY 1.06 in 2023 to CNY 1.21 in 2024 [3][9]. Business Outlook - The company is expected to benefit from the AI wave, with its cloud computing server shipments being the highest globally. The network communication and industrial internet sectors are also anticipated to gain from the new digital infrastructure developments [2][3]. - The switch and router business is expected to experience growth alongside the AI trend, with the introduction of 800G high-speed switches anticipated to contribute to revenue starting in 2024 [2][3].