STS(SH:603322) Southwest Securities·2024-05-06 02:30Investment Rating - The report assigns a "Buy" rating for the company with a target price of 37.80 CNY over the next six months [1]. Core Insights - The company reported a revenue of 2.45 billion CNY for 2023, representing a year-on-year growth of 20.7%. The net profit attributable to shareholders was 18.79 million CNY, up 23.7% year-on-year, with a significant increase in the computing power business [1][38]. - The computing power business has emerged as a new growth driver, with the company actively engaging in projects aligned with the national "East Data West Computing" strategy [1][31]. - The company has shown improved profitability, with a comprehensive gross margin of 8% and a net profit margin of -0.4% for 2023, indicating effective cost control [1][66]. Summary by Sections Financial Performance - In Q4 2023, the company achieved a revenue of 1.08 billion CNY, a year-on-year increase of 32.0% and a quarter-on-quarter increase of 91.2%. The net profit for the same quarter was 48.99 million CNY, up 175.5% year-on-year [1][38]. - For Q1 2024, the company reported a revenue of 810 million CNY, a remarkable year-on-year growth of 215.3%, and a net profit of 22.20 million CNY, marking a turnaround from losses [1][38]. Business Segments - The company’s revenue from the communication market accounted for 56.1%, while the intelligent computing market contributed 43.5%. The intelligent computing segment saw a significant revenue increase due to server sales and IDC business growth [1][38]. - The company has established partnerships with local governments to promote self-owned computing power projects and has become a specific industry agent for leading domestic GPU manufacturer "Muxi" [1][31]. Profitability and Cost Control - The company maintained a good control over expenses, with sales, management, and financial expense ratios decreasing in 2023 compared to the previous year [1][66]. - The gross margin for the intelligent computing business reached 6.3% in 2023, reflecting the successful transformation of the business model [1][38]. Future Outlook - The company forecasts EPS of 0.7 CNY, 1.05 CNY, and 1.54 CNY for 2024, 2025, and 2026, respectively, with corresponding dynamic PE ratios of 44x, 30x, and 20x [1][45]. - The report anticipates a revenue compound annual growth rate (CAGR) of 36.3% over the next three years, driven by the booming computing power sector [1][45].