LCXX(SZ:000977) Minsheng Securities·2024-05-04 18:00Investment Rating - The report maintains a "Recommended" rating for the company, indicating it is significantly undervalued given its leading position in the server industry and the expected high demand for AI computing [2][3]. Core Insights - The company reported a substantial revenue increase of 85.32% year-on-year for Q1 2024, reaching 17.607 billion yuan, with a net profit of 306 million yuan, up 64.39% year-on-year [2]. - The growth in revenue is attributed to increased customer demand and a significant rise in server sales, while the company has effectively controlled its expenses [2]. - Contract liabilities surged by 231.73% year-on-year to 4.14 billion yuan, indicating strong future revenue expectations due to increased advance payments [2]. - Inventory levels rose by 38.40% year-on-year to 24.29 billion yuan, reflecting heightened demand for AI computing power and servers [2]. - The company continues to solidify its leadership in the server market, with a 40.9% market share in liquid-cooled servers, which are expected to see a compound annual growth rate of 45.8% from 2023 to 2028 in China [2]. - The launch of the "Yuan Nao Qi Zhi" enterprise model development platform and the X400 AI Ethernet switch positions the company to capitalize on the growing AI application market [2]. Financial Forecasts - The company is projected to achieve net profits of 2.441 billion yuan, 3.019 billion yuan, and 3.522 billion yuan for the years 2024, 2025, and 2026, respectively [3][7]. - The estimated price-to-earnings (PE) ratios for 2024, 2025, and 2026 are 25, 20, and 17, respectively, indicating a favorable valuation compared to expected growth [3][7]. - Revenue forecasts for 2024, 2025, and 2026 are 72.482 billion yuan, 84.517 billion yuan, and 96.955 billion yuan, reflecting a growth rate of 10.0%, 16.6%, and 14.7% respectively [3][7].