\u3000\u30 China Baoan Group Co.Ltd(000009) 77 Inspur Electronic Information Industry Co.Ltd(000977) )
Matters:
The company announced in its 2021 annual report that in 2021, the operating revenue was 67.048 billion yuan, a year-on-year increase of 6.36%, and the net profit attributable to the parent company was 2.003 billion yuan, a year-on-year increase of 36.57%. The profit distribution plan for 2021 is: it is proposed to allocate 1.4 yuan (including tax) for every 10 shares, and the capital reserve will not be converted into share capital.
Ping An View:
The net profit attributable to the parent company increased significantly, and the leading position in the industry was stable. In 2021, the company’s operating revenue was 67.048 billion yuan, a year-on-year increase of 6.36%, and the revenue achieved steady growth. Among them, the revenue from server and parts business was 64.342 billion yuan, a year-on-year increase of 4.02%; The revenue of it terminal and bulk parts business was 2.458 billion yuan, a year-on-year increase of 160.70%. The net profit attributable to the parent company was 2.003 billion yuan, with a significant year-on-year increase of 36.57%, mainly due to the steady growth of the company’s revenue and the year-on-year decrease of expenses during the period. According to IDC data, in 2021, the market share of the company’s server products ranked second in the world, up one place from 2020; In the first half of 2021, the market share of the company’s AI server products ranked first in the world, with a market share of more than 20%. The company has a solid leading position in the global server industry.
The company’s gross profit margin and period expense rate decreased year-on-year, and R & D investment continued to increase. The gross profit margin of the company in 2021 was 11.44%, a slight decrease of 0.26 percentage points year-on-year. The company’s expense rate during 2021 was 7.52%, a slight decrease of 1.13 percentage points year-on-year, indicating that the company’s expense control effect was good. In 2021, the company continued to strengthen R & D investment in smart computing represented by cloud computing, big data and artificial intelligence, with R & D investment of RMB 2.833 billion, a year-on-year increase of 11.79%. The net operating cash flow of the company in 2021 was -8.289 billion yuan, with a significant year-on-year decrease, mainly due to the company’s increased stock, a significant increase in inventory and an increase in corresponding cash outflow.
The company actively implements the smart computing strategy, and cloud, AI and edge computing will promote the sustainable development of the company. In 2021, the company continued to focus on Intelligent Computing represented by cloud computing, big data and artificial intelligence, defined the industry development trend from computing to intelligent computing, adhered to the strategy of “openness, integration and Agility”, continued to innovate in R & D, production, delivery and service mode, and continued to lead the innovative development of Artificial Intelligence Computing, open computing, cloud computing and other fields. In terms of cloud computing, the company is the biggest beneficiary of cloud server and the world’s largest cloud server supplier. The company’s cloud server business will continue to benefit from the development of cloud computing. In terms of AI computing, according to IDC data, in the first half of 2021, the market share of the company’s AI server products ranked first in the world; From 2017 to the first half of 2021, the company’s AI server ranked first in the Chinese market. In terms of edge computing, the company began to layout edge computing technologies and products many years ago, and took the lead in releasing four product series: edge micro center, edge cloud server, portable AI server and edge micro server. In the first half of 2021, the company’s edge dedicated server ranked first in the Chinese market with a market share of 49.4%. At present, the state attaches great importance to the development of new infrastructure. 5g infrastructure, big data center, artificial intelligence and industrial Internet included in the new infrastructure will generate market demand for servers. As a leading enterprise in the server industry, we believe that the company will deeply benefit from the promotion of new infrastructure, and cloud, AI and edge computing will be the long-term driving force for the development of the company.
Profit forecast and investment suggestions: according to the company’s 2021 annual report, we adjusted the performance forecast and estimated that the net profit attributable to the parent company from 2022 to 2024 would be 2.381 billion yuan (the previous value was 2.365 billion yuan), 2.921 billion yuan (the previous value was 2.975 billion yuan) and 3.609 billion yuan (New), respectively. EPS would be 1.64 yuan, 2.01 yuan and 2.48 yuan respectively, and the PE corresponding to the closing price on April 8 would be 16.0, 13.0 and 10.6 times respectively. The company is a leading enterprise in the global server industry, with a stable leading position in the industry. The company continues to promote the smart computing strategy, actively layout in cloud servers, AI servers, edge computing servers and other fields, and grasp the future growth point of the industry. At present, the state attaches great importance to the development of new infrastructure. We believe that the company will deeply benefit from the promotion of new infrastructure. We are optimistic about the future development of the company and maintain the “recommended” rating of the company.
Risk tips: (1) the upgrading of China US trade war will affect the risk of the company’s purchasing Intel CPU. The company’s x86 servers are basically purchased from Intel’s CPU. If the Sino US trade war continues to upgrade, it may affect the company’s purchase of Intel CPU and the development of the company’s server business. (2) The risk of the company’s declining market share in China’s CSP industry. China’s large Internet companies have high requirements for server providers’ products and technical capabilities. If the company can not keep the advanced nature of server products and technologies in the future, or can not keep up with the close collaboration with internet customers, the company’s market share in China’s CSP industry will be in a downward trend. (3) The company’s AI server business development did not meet expectations. At present, the company is in a leading position in the global and Chinese AI server market. However, with the development of artificial intelligence industry, if the company can not continue to maintain the leading AI server products and technologies, the company’s AI server business will face the risk of not developing as expected.
