Zhejiang Century Huatong Group Co.Ltd(002602) policy + high customer certainty, IDC's second growth curve has been formed

\u3000\u3 China Vanke Co.Ltd(000002) 602 Zhejiang Century Huatong Group Co.Ltd(002602) )

Key investment points

Event: on February 28], the company's century Longteng settled its "Yifeng technology Guangming 5g big data center project" in Shenzhen, completed the acquisition of 50.1% equity, and planned to be put into operation in March 2022. It plans to add 12000 cabinets, which is expected to contribute revenue in 23 years.

The data center project has the advantages of resources and cost, and the business layout of IDC continues to be strengthened: Shanghai Longrui, which the company acquired and increased capital, has invested in shares and deeply participated in the "Tencent Yangtze River Delta artificial intelligence Advanced Computing Center" project since 2020. The data center where the project is located has obtained the index of 200000 tons of high-standard coal; In 2020, 36000 racks will be allocated to 12 new IDC projects in Shanghai, and the project won the target of 3000 racks; The project is expected to accommodate 35 Xj Electric Co.Ltd(000400) 00 total cabinets, belonging to a super large-scale data center; The superior geographical location distributed along the periphery of the city center makes the transportation more convenient; The project enjoys a preferential electricity price of 0.622 yuan in Shanghai, with low operation cost. At present, the project has completed the delivery of the first batch of cabinets in the second half of 2021 and entered the operation and maintenance stage.

Establish a cloud data division to accelerate the integration of IDC resources: the company takes the Internet data center and data security business as the core technology strategy, and decided to integrate the Shenzhen data center project, the Yangtze River Delta data center project and other related businesses on February 28 to establish a "cloud data center division". The plan will help the company speed up the integration of IDC resources, improve the operation efficiency of business in this field, accelerate resource acquisition and technology upgrading, and form competitiveness as soon as possible.

Join hands with industry giants to help industrial upgrading: Zhejiang Century Huatong Group Co.Ltd(002602) holding subsidiary century Longteng and leading enterprise in the field of security Westone Information Industry Inc(002268) build an overall Internet data security solution; Since the second half of 2021, it has successively signed strategic cooperation agreement and framework cooperation agreement with Tencent cloud and Huawei, focusing on deep-seated business and infrastructure construction such as data center, government cloud, intelligent photovoltaic and green energy storage, so as to help Internet enterprises realize professional and intelligent data security and meet the rapidly growing market demand.

Seize the opportunity of industrial development and create the second growth curve: in 2020, the data center will be included in the category of national new infrastructure. 5g construction and new infrastructure policies stimulate the continuous improvement of downstream customer demand and benefit data center related enterprises. According to the Research Report on the development of China's IDC industry from 2020 to 2021, in 2020, China's overall IDC business market reached 223.87 billion yuan, yoy + 43.3%, the traditional IDC business market reached 99.42 billion yuan, and CAGR reached 17.5% in the next three years, which is in a period of rapid growth. Shanghai Longrui project has obtained 30000 cabinets underwritten by Tencent, and the gross profit margin and net profit margin of the company have been improved. Under the integrated / separated mode of power leasing, the average annual net profit is expected to be 820 million yuan, with a net profit rate of more than 30%. The company continues to promote the development of Internet data center business, and is expected to build IDC business into the second growth curve after games and auto parts.

Profit forecast and investment suggestion: it is predicted that the EPS of 21-23 years will be 0.43 yuan, 0.54 yuan and 0.67 yuan respectively. The net profit attributable to the parent company will maintain a compound growth rate of 15.84% in the next three years The current market value of G-Bits Network Technology(Xiamen)Co.Ltd(603444) , Perfect World Co.Ltd(002624) , Wuhu 37 Interactive Entertainment Network Technology Group Co.Ltd(002555) three companies corresponds to 13 times of the average PE under the market consensus expected performance in 2022. In view of the completion of the company's data center project and the accelerated integration of IDC business, 20 times of PE valuation is given, corresponding to the target price of 10.8 yuan, and the "buy in" rating continues to be maintained.

Risk warning: the construction period of relevant projects is long, and the profitability is uncertain in the short term; The examination and approval policies of the first tier cities in Beijing, Shanghai, Guangzhou and Shenzhen were tightened.

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