Sugon(SH:603019) Ping An Securities·2024-04-19 10:00Investment Rating - The report maintains a "Recommended" investment rating for the company [2][7] Core Views - The company has achieved steady growth in performance, with 2023 revenue reaching 14.353 billion yuan, a year-on-year increase of 10.34%, and a net profit of 1.836 billion yuan, up 18.88% year-on-year [4][5] - The company is expected to benefit from the release of computing power demand driven by the growth of artificial intelligence and liquid cooling technology [7] - The company has a strong focus on research and development, with R&D expenses increasing by 19.07% in 2023, indicating a commitment to enhancing its core competitiveness in high-end computing [5][7] Summary by Sections Financial Performance - In 2023, the company reported operating income of 14.353 billion yuan and a net profit of 1.836 billion yuan, with respective year-on-year growth rates of 10.34% and 18.88% [4][5] - The company’s gross margin remained stable at 26.26%, while the net profit margin improved to 12.79%, an increase of 0.92 percentage points from the previous year [5] - The forecast for 2024-2026 projects net profits of 2.303 billion yuan, 2.908 billion yuan, and 3.743 billion yuan, respectively, with corresponding EPS of 1.57 yuan, 1.99 yuan, and 2.56 yuan [7][9] Business Segments - The IT equipment business generated revenue of 12.780 billion yuan, while software development and services contributed 1.567 billion yuan, reflecting growth rates of 11.63% and 0.75%, respectively [5] - The company’s high-end computing products are increasingly adopted across various sectors, including telecommunications, finance, energy, and education [7] Market Trends - The demand for computing power is expected to rise significantly due to advancements in artificial intelligence, with government initiatives aiming for a substantial increase in computing capacity by 2025 [7] - The liquid cooling server market in China is projected to grow at a compound annual growth rate of 54.7% from 2022 to 2027, with the company positioned as a leader in this segment [7] Valuation Metrics - The company’s P/E ratio is projected to decrease from 35.6 in 2023 to 17.5 by 2026, indicating an attractive valuation as earnings grow [6][10] - The forecasted ROE is expected to improve from 9.8% in 2023 to 14.3% by 2026, reflecting enhanced profitability [10]