\u3000\u3000 Digital China Group Co.Ltd(000034) Digital China Group Co.Ltd(000034) )
Core view
It distribution leader, two wheel drive of Xinchuang + cloud service. The predecessor of the company, Digital China Group Co.Ltd(000034) Holding Co., Ltd., was split from the original Lenovo Group and has been deeply engaged in it distribution for more than 20 years, providing digital products, solutions and professional IT services to millions of enterprises and hundreds of millions of consumers. In 2017, the company began a comprehensive cloud transformation, with the goal of relying on the public cloud MSP business to open up a complete cloud service value chain from the aggregation of massive cloud resources in the upstream to cloud value-added services. In 2019, the company joined Huawei Kunpeng ecology and launched Xinchuang business. At present, Shenzhou Kuntai Xiamen production base has been put into operation and released a series of new products.
Kunpeng ecology is becoming more and more mature, and Xinchuang business is facing a turning point. As an early manufacturer of it localization in China, the company comprehensively arranges the information innovation business and creates a pioneer of it localization. The company took the lead in participating in Kunpeng ecology, built the first Kunpeng Supercomputing Center in 2020, and put Shenzhou Kuntai industrial base into operation. Kunpeng ecology is leading the new development direction of China's computer industry. Under the trend of its gradual maturity, the company cooperates closely with Huawei and ushers in opportunities for Xinchuang business. In 2021, the company developed products related to PC chips in collaboration with Kunteng and Kunpeng.
The cloud business continues to grow rapidly and the distribution cornerstone is stable Digital China Group Co.Ltd(000034) cloud service capacity and scale are in the first echelon of the Chinese market, and MSP market share ranks in the top three. The market share of China's public cloud IAAs + PAAS shows a situation of one super and many strong. Alibaba, Huawei, AWS and other leading enterprises have close cooperation with Digital China Group Co.Ltd(000034) and Digital China Group Co.Ltd(000034) MSP market share is expected to further increase in the future. The company's distribution business has grown steadily and has high operation efficiency (inventory turnover rate is higher than the industry average), providing stable support for the development of other businesses.
Investment suggestion: we expect the company to realize a net profit of 950, 1119 and 1315 million yuan in 22-24 years, and EPS of 144, 169 and 99 yuan respectively. The segment valuation gives the company a 22-year target market value of 19.089 billion yuan, corresponding to the target price of 28.89 yuan, maintaining the "buy" rating.
Risk tip: there are risks that market competition intensifies, the promotion of cloud service business is not as expected, and the promotion of new products is not as expected.
