LCXX(SZ:000977) Guohai Securities·2024-05-05 05:30Investment Rating - The investment rating for the company is "Buy" (maintained) [1][11]. Core Views - The company has shown significant revenue growth in Q1 2024, driven by increased demand for AI and general-purpose servers, with a revenue of 17.607 billion yuan, up 85.32% year-on-year [4][5]. - The company is expected to benefit from ongoing technological innovations and a rise in liquid cooling server penetration, which is projected to enhance profitability [3][6]. - The demand for general-purpose servers is recovering, supported by increased capital expenditures from major cloud service providers (CSPs) and favorable government policies [7][9]. Summary by Sections Financial Performance - In Q1 2024, the company achieved a net profit of 306 million yuan, representing a year-on-year increase of 64.39%, and a non-net profit of 240 million yuan, up 62.96% [4][5]. - The company's gross margin was 8.08%, a decrease of 4.93 percentage points year-on-year, while the net margin remained stable at 1.68% [6][11]. Market Position and Growth Drivers - The company holds over 40% market share in liquid cooling servers in China, maintaining its leading position [3]. - The global server shipment is expected to recover, with a projected quarter-on-quarter increase of 1.7% in Q1 2024, driven by rising demand for general-purpose servers [5][9]. Future Outlook - Revenue forecasts for 2024-2026 are projected at 80.055 billion yuan, 101.324 billion yuan, and 124.433 billion yuan, respectively, with corresponding net profits of 2.410 billion yuan, 3.320 billion yuan, and 4.326 billion yuan [9][10]. - The company is expected to benefit from the digitalization and intelligence trends, with a projected EPS of 1.64 yuan, 2.25 yuan, and 2.94 yuan for the years 2024, 2025, and 2026, respectively [9][10].