\u3000\u3000 Zhejiang Century Huatong Group Co.Ltd(002602) (002602)
Event: on February 17, the national development and Reform Commission and other departments officially released the news that the landmark project of new infrastructure – “counting from the east to the west” project was officially launched. The “east to West computing” project refers to the construction of a new computing power network system to transmit the computing power demand of the East and a large number of production and living data to the western region for storage, calculation and feedback, and establish a national computing power hub node in the western region. At present, a total of 8 National Computing hub nodes in Inner Mongolia, Guizhou, Gansu, Ningxia, Beijing Tianjin Hebei, Yangtze River Delta, Guangdong Hong Kong Macao Dawan district and Chengdu Chongqing have been re approved, and 10 national data center clusters have been planned. The overall layout design of the national integrated big data center system was completed.
Comments: “counting from the east to the west” will directly drive the whole industry of the data center. IDC has become the core site for the efficient and stable operation of information technology and the core infrastructure of the new generation of information technology. The new generation Supercomputing Center provides human-computer interaction, human-computer integration and human-computer co creation services for the new generation of artificial intelligence applications and intelligent terminals, promotes the coordinated development of artificial intelligence infrastructure, algorithms and industrial applications, and promotes the construction of new infrastructure, The fundamental role played in the adjustment of economic structure and the development of emerging industries is more critical and important.
Since the third quarter of 2020, the company has increased the business segment of IDC data center through mergers and acquisitions and capital increase of Shanghai Longrui. At present, Shanghai Longrui’s main project is the “Yangtze River Delta artificial intelligence Supercomputing Center” located in Songjiang District, Shanghai, which will serve as the hub of Tencent cloud’s landing Yangtze River Delta artificial intelligence Supercomputing Center in Songjiang District, Shanghai and the core computer room in East China, The data center project is also listed in the list of the first batch of major projects of new infrastructure construction in Shanghai from 2020 to 2022 by Shanghai development and Reform Commission. In order to enhance the strength of Shanghai Longrui project, the company signed the equity transfer agreement with PLoS and Seventh Avenue in March 2021 to transfer 50.10% of the equity of Shanghai Longrui held by the company, Jiliu and seventh avenue to PLoS. The company cooperates with Poulos to provide development impetus for Shanghai Longrui’s Internet data center with the help of its experience in real estate and Internet data center. After this transaction, the company is expected to hold a 49.9% interest in Shanghai Longrui. Shanghai Longrui Songjiang project is located in an area where Shanghai is building a science and innovation center and an innovation and development highland of artificial intelligence with international competitiveness, and the relevant market demand is more vigorous; The Songjiang data center project of the company is constructed in accordance with the international leading Tier3 and some tier4 standards, meeting the top data security standards of high seismic fortification, impact prevention, intrusion prevention, leakage prevention, flood control and waterlogging prevention and the construction standards of high-efficiency and energy-saving data center. At the same time, Shanghai Longrui is an important participant in Tencent’s artificial intelligence Supercomputing Center Project in the Yangtze River Delta. It cooperates with Tencent to complete the construction and operation of the Supercomputing Center and the introduction and incubation of enterprises in the artificial intelligence Industrial Park. Tencent and the enterprises settled in the artificial intelligence Industrial Park in the future are expected to become an important source of customers.
On November 29, 2021, a wholly-owned cooperation agreement was signed between Tencent and Tencent in Pudong New Area. Shengqu game will distribute, promote and operate Tencent’s game products on its platform, have the right to decide the service opening progress and time of Tencent products, and provide high-quality distribution and operation services for users of Tencent products, including but not limited to internal and external game malls, official websites and communities that carry out game operation activities, open or operate Tencent products. Tencent gets 20% of the revenue generated by cooperation, and Shengqu game gets 80% of it. In 2022, the novel adapted the game of the same name “Qing Nian Nian” and the new self-developed genuine legendary IP mobile game “legend world” are expected to go online. In addition, Diandian interactive has a large number of self-developed games planned to go online overseas one after another, and the product types include but are not limited to strategy, card, leisure, game and other types. In addition, the company is also developing mobile game products based on some well-known IP, including the genuine mobile game of the animation series of JOJO’s wonderful adventure, the legend of ancient dragons (to be determined), famine: new home, etc. the company is expected to hold and operate legend IP in the Chinese market for a more stable and long time in the future. At the same time, the company plans to further expand the proportion of official clothing market and improve the integrated authorization market. Investment suggestion: we are optimistic about the pulling effect of the East West calculation on the IDC industrial chain, and the company has the advantages of project location and customer resources in the IDC sector. There are abundant reserves of game products. It is expected to start the product year in 2022.
In February, the company plans to use its own funds or self raised funds to buy back the company’s shares in the form of centralized bidding transaction for the later implementation of equity incentive plan, employee stock ownership plan or reduction of registered capital. The total amount of repurchase funds is 500-1 billion yuan, and the repurchase price is no more than 10 yuan / share (the closing price on February 22 is 6.70 yuan / share). The period of share repurchase is 12 months from the date when the general meeting of shareholders deliberates and approves the share repurchase plan. It is estimated that the number of shares to be repurchased is about 50-100 million shares, accounting for about 0.67-1.34% of the total share capital of the company. Share repurchase demonstrates long-term confidence and improves the company’s long-term incentive mechanism.
According to wind’s unanimous expectation, the company’s total operating revenue from 2021 to 2023 was 13.718/20.909/25.609 billion yuan respectively, with a year-on-year increase of – 8.44% / 52.42% / 22.48%, and the net profit attributable to the parent company was 3.221/39.90/5.007 billion yuan respectively, with a year-on-year increase of 9.32% / 23.87% / 25.49%. The closing price on February 22 was 6.70 yuan / share, corresponding to 16.43/13.26/10.57x PE from 2021 to 2023. It is recommended to focus on it.
