\u3000\u3000 Inspur Electronic Information Industry Co.Ltd(000977) (000977)
The strategic position of digital economy is unprecedented, and the leader of IT infrastructure is expected to benefit the core. 1) On January 12, 2022, the State Council issued the notice of the 14th five year plan for the development of digital economy. By 2025, the added value of China’s core industries of digital economy should increase from 7.8% to 10% of GDP; On January 15, Qiushi published an article Xi Jinping : constantly strengthening, optimizing and expanding China’s digital economy. The two top-level documents confirm that China’s strategic position of digital economy has reached an unprecedented height and is expected to become an important starting point for high-quality and stable economic growth and development. 2) Among them, it infrastructure is the bottom foundation of digital economy construction. Both documents list optimizing and upgrading digital infrastructure and accelerating the construction of new infrastructure as an important development direction. It has become a consensus to “moderately advance infrastructure construction”, and the new infrastructure of digital economy is expected to continue to be implemented. 3) Server is the basic tool for managing computing resources and an important investment direction for IT infrastructure construction. As a leader in the server industry, the company has a stable leading position and is expected to benefit from the core under the background of the development of digital economy.
The penetration of cloud computing is unstoppable, the upstream demand is expected to hit the bottom and rebound, and the industry boom may be ready for repair. 1) In terms of global environment, the cloud revenue of overseas technology giants in 2021q4 continues to increase, the AWS revenue still reaches about 40% year-on-year, the capital expenditure is expected to be significantly better in 2022, and the infrastructure investment is expected to further increase; The growth rate of Intel DCG continues to pick up, with a year-on-year growth rate of 20% in 2021q4, the highest point in nearly six quarters, and Icelake was released in April 2021, which is expected to promote the upgrading of servers; The year-on-year growth rate of aspeed’s monthly revenue has rebounded sharply since August 2021, both of which remain at more than 30%. Multiple forward-looking signals jointly show that global cloud computing is still in the stage of rapid penetration, and cloud upstream investment or gradual repair is expected to continue to boost the prosperity of the industry. 2) For China, according to IDC statistics, in 2019, China’s overall cloud computing market, including cloud services, cloud related services and cloud infrastructure construction, reached US $32.9 billion. It is expected that the market will reach more than US $100 billion in 2024. In terms of industry application, stimulated by the epidemic, the Internet industry driven by video, games and e-commerce has promoted the rapid growth of the public cloud service market; Government, medical, education, manufacturing, services and other non internet industries have also seen the important role of cloud computing in business digital transformation, which will accelerate the full application of cloud computing, and the overall penetration of cloud computing in China is unstoppable. For public cloud enterprises, Alibaba cloud’s 2021q3 revenue still maintained a relatively high growth rate, with a year-on-year growth rate of 34%; The year-on-year growth rate of Alibaba 2021q3apex has returned to positive, reaching 12%. With China’s Internet governance gradually entering a stable period, the demand for cloud deployment is expected to be released steadily. 3) On the whole, from the second half of 2020 to the end of 2021, the overseas epidemic showed a long tail, the global economic growth was sluggish, and the investment in cloud upstream entered a digestion cycle of about two years; From the end of 2021, the recovery signals of cloudy upstream appear frequently; In 2022, the penetration of cloud computing is unstoppable, the demand for Cloud Computing in various industries is still strong, and Internet governance is expected to gradually enter a stable period. We believe that the demand of the server industry is expected to rebound at the bottom, and the prosperity of the industry may be significantly repaired.
The valuation position is at the bottom of history and the margin of safety is sufficient. According to wind data, the PE level of the company from 2019 to 2020 is about 30x-40x, including 20x-30x since 2021. As of February 8, 2022, the company’s pettm is about 20.96x; Corresponding to the consensus expectation of wind, PE (2021e) is about 22.73x, which is at the bottom of history. In the context of the digital economy boosting the demand for IT infrastructure, the continuous penetration of cloud computing and the improvement of the global capex environment, we expect the prosperity of the industry to continue to improve, and the company’s performance and valuation level are expected to double.
Maintain the “buy” rating. According to key assumptions, it is estimated that the operating revenue from 2021 to 2023 will be 74.273 billion, 86.782 billion and 100.544 billion respectively, and the net profit attributable to the parent company will be 1.932 billion, 2.535 billion and 3.295 billion respectively. Maintain the “buy” rating.
Risk warning: downstream demand slows down; Intensified competition in the server industry; Escalation of trade friction; Bad debt risk
