\u3000\u3000 Dawning Information Industry Co.Ltd(603019) (603019)
Event:
On February 22, 2022, the company released the performance express of 2021. During the reporting period, the company realized an operating revenue of 11.183 billion yuan, a year-on-year increase of 10.06%; The total profit was 1.422 billion yuan, a year-on-year increase of 35.15%; The net profit attributable to the parent company was 1.135 billion yuan, a year-on-year increase of 37.98%; The net profit attributable to the parent company after deduction was 753 million yuan, a year-on-year increase of 43.23%.
Comments:
The performance in 2021 exceeded expectations, and the high view was verified. In 2021, the company realized a net profit attributable to the parent company of 1.14 billion yuan, an increase of 38% at the same time, and the net profit after deducting non profits reached 750 million yuan, an increase of 43.2% at the same time, which was verified to be higher than the expected performance. The provision for asset impairment of about 200 million yuan (including inventory impairment of about 100 million and intangible asset impairment of about 70 million) was withdrawn in 2021. Compared with 2020, the overall asset impairment of 50 million increased significantly, mainly due to the controllable impact of inventory price fluctuation. The rapid growth of the company’s performance is mainly due to two factors: first, the proportion of domestic servers with high gross profit margin continues to increase, which is expected to drive the overall gross profit margin to increase significantly; Second, it is expected that haiguang information and other companies with its shares will have good performance in 2021 and obvious profit contribution factors. View reiterated: in the 2021h1 performance review, we judged in advance that the domestic substitution of servers and the optimization of competition pattern will bring new opportunities. In the future, the company is expected to continue to take the lead by virtue of product technology and ecological advantages, which will have a positive impact on the long-term performance growth of the company.
“Counting from the east to the west” drives the expansion of the industry and benefits the upstream server manufacturers. The growth of the server industry is obviously affected by downstream demand and policies, and the expansion of the industry is very important to the growth of leading manufacturers. Recently, the national development and Reform Commission and other ministries and commissions jointly issued a notice, agreed to start the construction of National Computing hub nodes in 8 places, planned 10 national data center clusters, and officially launched the “counting from the east to the west” project. Up to now, the scale of IDC in China has reached 5 million standard racks, and the computing power has reached 130 eflops (1.3 trillion floating-point operations per second), which is expected to maintain a growth rate of more than 20% every year. The implementation of the policy of “counting from the east to the west” once again reaffirms the fundamental role of computing power foundation in the trend of digital transformation, and all localities have successively issued relevant implementation policies to promote the project of computing power improvement. IDC and IAAs manufacturers of cloud computing are the bearer objects of “East digital West computing”. The most basic hardware form of IDC and cloud computing is all kinds of servers. The expansion of computing capacity directly increases the demand for servers. The expansion of the Chinese market is bringing significant market opportunities to server manufacturers. In addition, the localization rate of the current server market is still low, The improvement of domestic substitution ratio is double positive for domestic server manufacturers. As a leading domestic server enterprise, the company is expected to take the lead in benefiting.
As the leader of domestic CPU, haiguang information will fully benefit from the domestic substitution trend. X86 architecture is still the mainstream architecture of the server. Generally, the cost of CPU in the server can reach more than 40%. As the leader of domestic x86 architecture CPU, haiguang information has become an important CPU supplier of the company, and the supply change has a significant impact on Dawning’s performance. According to the announcement of haiguang information, in 2020, the market share of haiguang information chips in server chips was about 5%. In that year, the operating revenue was 1.022 billion yuan, an increase of 168% at the same time. Haiguang has a rapid development momentum. At present, the domestic penetration rate in the server field is still low and the substitution space is broad. The synergy between Haiguang and the company’s business will be more significant, and dawning will continue to benefit from the joint market development strategy. The company’s profit forecast and investment rating: the company’s performance growth in 2021 has been verified, and its industry is facing an important historical opportunity of domestic substitution. The “East number West calculation” project brings new business increment, which is expected to build a new growth curve, and the leading companies will fully benefit. We estimate that the net profit of the company from 2022 to 2023 will be 1.542 billion yuan and 1.971 billion yuan respectively, and the corresponding EPS will be 1.06 and 1.36 yuan respectively. The current share price corresponds to 31 and 25 times the PE value from 2022 to 2023 respectively. At present, it is at the low level of the valuation center, firmly optimistic about the domestic substitution trend and the leading position of the company, and was raised to the “strongly recommended” rating.
Risk tip: the demand of the server industry is less than the expected risk, the downstream capital expenditure is less than the expected risk, and the upstream chip price rise risk.
