\u3000\u30 China Baoan Group Co.Ltd(000009) 77 Inspur Electronic Information Industry Co.Ltd(000977) )
22q1 net profit attributable to parent increased by 30% – 50%, and the performance exceeded expectations Inspur Electronic Information Industry Co.Ltd(000977) released the performance forecast for the first quarter of 2022 on the evening of April 11. It is expected to realize the net profit attributable to the parent company of 314362 million yuan, with a year-on-year increase of 30% – 50% and 241 million yuan in the same period last year. In the context of the impact of the epidemic and the tight supply of raw materials, the company still maintained a high-speed growth trend, and the profit in the first quarter exceeded our expectations.
Downstream demand rebounded, and 22q1 revenue increased by more than 45% year-on-year. Since the second half of 2021, the growth rate of the server market has shown a significant recovery trend after the base pressure is too high. According to the data released by IDC, users’ investment in data center infrastructure continued to rise in 2021. The shipments and sales of the global server market were 13.539 million units and 99.22 billion US dollars respectively, with a year-on-year increase of 6.9% and 6.4%. China’s market performance was particularly strong, with sales reaching US $25.09 billion, a year-on-year increase of 12.7%, leading the world. Thanks to the recovery of downstream demand, Inspur’s revenue growth also showed an obvious upward trend quarter by quarter. The year-on-year growth rates of 21q3, 21q4 and 22q1 were 16%, 19% and 45% respectively. In 2021, the company has grown into the second largest server leader in the world and the first in China, with China’s market share remaining at 31%.
Look ahead and grasp, actively prepare goods to deal with the shortage of raw material supply. The shortage of upstream components represented by chips runs through 2021, making the strong demand and tight supply of digital transformation the main contradiction. Relying on the foresight of the industry, the company has strengthened the stock of raw materials, which is very obvious in the 2021 annual report: the inventory is 22.4 billion yuan, an increase of 105% over the beginning of the year, including 17.1 billion yuan of raw materials, an increase of 173% over the beginning of the year, and the net operating cash flow is -8.29 billion yuan. The company’s proactive and active goods preparation and strong supply chain management ensure the delivery capacity of the wave, enabling the company to seize the dividend of accelerating the construction of digital economy and realize the continuous growth of revenue and profit. The high growth in the first quarter of 2022 is enough to highlight the leading position of the company’s server and its excellent control ability over the industrial chain.
Investment suggestion: it is estimated that the net profit attributable to the parent company in 22-24 years is RMB 2.317 billion, RMB 2.699 billion and RMB 3.061 billion respectively, and the current market value corresponds to 16 / 14 / 12 times of PE in 22-24 years. Inspur is a global server leader and is expected to fully benefit from the increase of global Internet capital expenditure and the dividend of China’s “digital economy” construction. If CITIC computer equipment industry is selected as a comparison, the corresponding PE of computer equipment sector in 2022 is 32 times under the unanimous expectation of wind, and the company is still underestimated as an industry leader. Therefore, the “recommended” rating is maintained.
Risk warning: the construction of digital economy is not as expected; The capital expenditure of Internet companies is lower than expected; The improvement process of raw material supply pattern was less than expected.
