\u3000\u30 China Baoan Group Co.Ltd(000009) 77 Inspur Electronic Information Industry Co.Ltd(000977) )
[key points of investment]
Revenue growth and profitability improved significantly. The company released its 2021 annual report. In 2021, it achieved a revenue of 67.048 billion yuan, a year-on-year increase of 6.36%. In the whole year, the net profit attributable to the parent company was 2.003 billion yuan, a year-on-year increase of 36.57%, and the deduction of non net profit was 1.797 billion yuan, a year-on-year increase of 27.56%. The net operating cash flow was -8.290 billion yuan, a year-on-year increase of -455.73%, mainly due to the increase of cash outflow caused by the company’s increased stock. The year-end inventory balance was 22.402 billion yuan, a year-on-year increase of 104.71%. 21q4 achieved a revenue of 20.8 billion yuan in a single quarter, a year-on-year increase of + 18.62%, the highest quarterly revenue level in history. In Q4, the net profit attributable to the parent company and the net profit deducted from non net profit in a single quarter were 652 million yuan and 589 million yuan respectively. In 2021, the gross profit margin was 11.44%, a year-on-year decrease of 0.26pct, and the net profit margin was 3.03%, a year-on-year increase of 0.64pct. The cost management improved the net profit level, and the profitability was significantly improved. The sales cost was 1.461 billion yuan (- 21.64%), the management cost was 724 million yuan (- 11.90%), the R & D cost was 2.921 billion yuan (+ 10.85%), and the financial cost was – 61 million yuan (- 145.43%).
High market share leads the market, and the layout of Intelligent Computing leads the market. The sales volume of the company’s products has maintained a leading position. According to IDC data, the company’s server products ranked second in the world in 2021, with a market share of more than 30% in the Chinese market; 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%. According to Gartner data, Inspur storage ranked among the world’s top five in sales in 2021 and ranked second in the world’s second-largest storage market. According to synergy data, the company’s servers ranked first in the global public cloud infrastructure computing market share for 11 consecutive quarters. The company’s product line based on smart new infrastructure layout also shows strong market competitiveness. From 2017 to the first half of 2021, the company’s AI server ranks first in the Chinese market; Edge dedicated servers ranked first in the Chinese market with a market share of 49.4% in the first half of 2021.
The policy east wind blows, and the downstream demand is expected to be further released. In January 2022, Xi Jinping General Secretary proposed to “build a national integrated data center system” in the article “constantly strengthening, optimizing and expanding China’s digital economy”; In February, the project of “counting from the east to the west” was officially launched in an all-round way, with continuous favorable policies. The infrastructure of computing power has become a consensus. The accelerated integration of digital economy and real economy is expected to jointly promote the rapid growth of China’s server market. The company actively responded to the dual carbon goal, promoted the reduction of energy consumption in the data center, established and put into use the largest liquid cooling R & D and production base in Asia. The annual production capacity of the production base reached 100000 units, and realized the mass delivery of the whole cold sector liquid cooling cabinet for the first time in the industry, which can help reduce the pue of the user’s data center to less than 1.1, and the overall delivery cycle is within 5-7 days. As a leader in China’s server market, the company is expected to fully benefit from incremental demand.
[investment suggestions]
As the world’s leading server leader, the company is expected to lead the downstream demand driven by favorable policies and other factors. It is estimated that from 2022 to 2024, the operating revenue of the company will be 77.197/88.499/99.267 billion yuan respectively, the net profit attributable to the parent company will be 2.590/29.82/33.76 billion yuan respectively, the EPS will be 1.78/2.05/2.32 yuan respectively, and the corresponding PE will be 14 / 12 / 11 times respectively, which will be rated as “overweight”.
[risk tips]
Risk of capital expenditure reduction of downstream cloud computing manufacturers;
The risk that the policy promotion is not as good as expected;
Inventory backlog and impairment risk.
