\u3000\u3000 Digital China Group Co.Ltd(000034) (000034)
Core view
Event: on January 29, Digital China Group Co.Ltd(000034) released the performance forecast for 2021. In 2021, it is expected to achieve revenue of 117.9-127.1 billion yuan, with a year-on-year increase of 28.07% - 38.06%. It is estimated that the net profit attributable to the parent company will be 200-260 million yuan, a year-on-year decrease of 67.95% - 58.34%, and the deduction of non net profit will be 66-70 million yuan, a year-on-year increase of 1.25% - 7.39%.
Revenue grew rapidly, and new businesses such as Xinchuang increased investment, dragging down immediate profits. In 2021, it is expected to achieve revenue of RMB 117.9-127.1 billion, with a year-on-year increase of 28.07% - 38.06%. In Q4 single quarter, it is expected to achieve revenue of RMB 31.9-41.1 billion, with a year-on-year increase of 12.43% - 44.86%. It is expected to realize a net profit of RMB 660-700 million, with a year-on-year increase of 1.25% - 7.39%. In the single quarter of Q4, it is expected to realize a net profit of RMB 158-198 million, a slight decline compared with Q4 last year. The growth rate of net profit in the current period was lower than that of revenue, which was mainly due to the company's increasing product R & D efforts in the field of independent brand of Xinchuang and actively expanding the market, which greatly increased the overall cost of the company compared with last year. We expect that the company is expected to usher in the release of performance as the follow-up credit innovation business ushers in a turning point and gradually increases its volume.
Distribution and Xinchuang business continued to grow rapidly. The company's overall business has maintained good growth, among which the cloud service business continues to maintain rapid growth, the service capacity continues to improve, the business structure continues to improve, and the cloud business revenue is expected to increase by 45% - 55% year-on-year. The company is one of the few enterprises in China that can realize MSP services in a cloudy environment, one of the few enterprises in China that can realize the monitoring of cloud platform native PAAS, and one of the few enterprises in China that can help customers realize digital application development in a cloudy environment. The company continues to deepen the layout, continue to consolidate the professional service capabilities of multi cloud and hybrid cloud management, and further strengthen the service capabilities of 3A (AWS, azure, aliyun) and mainstream public cloud manufacturers such as Google cloud, Huawei cloud, Tencent cloud, mobile cloud and JD Zhilian cloud. The company has served more than 100 large and medium-sized enterprises (excluding pure resale business customers), including more than 30 of the world's top 500 customers. The annual revenue of cloud computing business of key customers exceeds 10 million yuan and still maintains rapid growth, realizing a major breakthrough in the revenue of cloud operation and maintenance services of single customers of more than 100 million yuan.
Xinchuang's business grew rapidly and promoted the diversified layout of products. In response to the call of the state to accelerate the promotion of "new infrastructure", the company launched a new layout based on the "Kunpeng + shengteng" private brand, and quickly became one of the industry leaders. In the 21st year, the company's independent brand business revenue is expected to increase by 120% - 140% year-on-year, but the overall scale is still small. The main reason is that Huawei is sanctioned and the chip supply is tight. Therefore, while developing products based on Kunpeng processor, the company is also carrying out diversified layout, completing the test of PC products based on Godson and Feiteng processor, and began to put them on the market. In the past 21 years, the company has invested a large amount of R & D and sales expenses in the Xinchuang business, while the income has not yet formed a large scale due to the chip supply factor. The Xinchuang business has had a partial negative impact on the company's net profit. With the deepening cooperation between the company and many partners in the field of information innovation, the product line of information innovation is richer, the supply problem will be gradually solved, and the 22-year information innovation business is expected to usher in a turning point.
Investment suggestion: as a leader in China's MSP industry and an important manufacturer of servers and complete machines in the field of Xinchuang, the company is expected to continue to benefit from the trend of large volume of Xinchuang. We estimate that the company's operating revenue from 2021 to 2023 will be 120.969/130.840/142.347 billion yuan respectively, the net profit attributable to the parent company will be 220 / 902 / 1116 million yuan respectively, and the EPS will be 0.33/1.36/1.69 yuan respectively, maintaining the "buy" rating.
Risk tip: the policy promotion is not as expected, and the risk of intensified competition of emerging products.
