Investment Rating - The investment rating for the company is "Buy - A" with a target price of 49.12 CNY, maintaining the rating [5]. Core Views - The company is positioned to benefit from the backdrop of technological self-reliance and Huawei's comprehensive return, with the recent acquisition laying a solid foundation for future strategic layout and business expansion [10]. - The company reported a revenue of 175.81 billion CNY in 2023, a year-on-year decrease of 7.97%, and a net profit of 5.34 billion CNY, down 45.15% year-on-year [2][3]. - In Q1 2024, the company achieved a revenue of 54.49 billion CNY, a year-on-year increase of 29.65%, but reported a net loss of 2.77 billion CNY [3]. Financial Performance Summary - In 2023, the digital innovation business generated revenue of 83.48 billion CNY, accounting for 47.48% of total revenue, while the strategic emerging industry contributed 64.11 billion CNY, representing 36.47% [3]. - The company’s revenue by industry in 2023 included: - Telecommunications equipment: 70.54 billion CNY (YoY +18.35%) - Financial technology: 40.42 billion CNY (YoY +6.31%) - Internet services: 32.87 billion CNY (YoY -9.34%) - High-tech and manufacturing: 23.72 billion CNY (YoY +1.66%) [3]. - The company’s expenses in 2023 were as follows: - Sales expenses: 3.29% - Management expenses: 7.82% - R&D expenses: 5.44% [3]. - The projected revenues for 2024-2026 are 288.53 billion CNY, 332.51 billion CNY, and 388.11 billion CNY, with net profits of 7.80 billion CNY, 10.02 billion CNY, and 12.07 billion CNY respectively [10]. Strategic Developments - The company completed the acquisition of Tongfang Computer and Tongfang International in January 2024, focusing on the development, manufacturing, sales, and technical services of PC, server, and terminal products [9]. - The company aims to create an integrated hardware and software ecosystem in collaboration with Huawei, leveraging products like Tongfang PCs, Harmony OS, and Euler OS [9][10].
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