\u3000\u3000 Inspur Electronic Information Industry Co.Ltd(000977) (000977)
Conclusions and recommendations:
The company is the world’s leading provider of data center IT infrastructure products, solutions and services, with continuous improvement of profitability and consolidation of industry leading position. With the continuous implementation of new technologies and applications such as cloud computing, big data and artificial intelligence in China, the company is expected to continue to benefit from the development of digital economy and localization substitution, and give a “buy” rating.
High net profit growth and continuous improvement of profitability: in the first three quarters of 2021, the company achieved a revenue of 46.247 billion yuan, a year-on-year increase of 1.64%; The net profit was 1.351 billion yuan, a year-on-year increase of 114.99%; The net profit after deducting non-profit was 1.208 billion yuan, a year-on-year increase of 98.76%. The company’s net profit achieved high growth year-on-year, mainly benefiting from the demand of the downstream market. At the same time, the optimization of the company’s product structure led to the increase of gross profit margin year-on-year. The company’s profitability continued to improve.
Inspur server shipments ranked second in the world: according to the 2021q3 global server market quarterly report released by IDC, the scale of the global server market increased by 8.8% year-on-year to US $24.68 billion, and the shipment increased by 9.6% year-on-year to 3.376 million units. In terms of manufacturer ranking, Dell, Inspur and HPE maintain the top three in the world. Among them, Inspur’s global advantages have further expanded. The year-on-year growth rates of sales and shipments are 15% and 14% respectively, exceeding the average growth rate. The global server market share reaches 10%, and continues to remain the second in the world and the first in China. At present, Inspur has become the core strategic supplier of the Internet industry. China’s Internet market share ranks first, with a share of more than 50%; The market share of ECS ranks first in the world; The market share of storage server is the top five in the world and the top two in China; In the field of edge computing, Inspur edge computing server ranked first in the Chinese market with 49.4%. The leading position of the company in the industry is stable.
The prosperity of the server industry has been improving for a long time: according to IDC’s prediction, the compound growth rate of China’s overall server market will reach 12.7% in the next five years, and the scale of China’s overall server market is expected to reach US $42.47 billion in 2025, of which the x86 server market will reach a compound growth rate of 13% in the next five years, In 2025, the market scale of X86 server is expected to reach US $41.42 billion. We believe that with the rapid promotion of emerging technologies such as artificial intelligence, big data, driverless and VR / AR in China, the demand for data processing capacity is increasing, and the prosperity of the server industry is improving for a long time. The company will benefit from the high prosperity of the industry for a long time.
Profit forecast: we expect the net profit of the company in 2021, 22 and 23 to be RMB 2.039/24.90/2.970 billion respectively, yoy + 39.04% / + 22.14% / + 19.27%, equivalent to EPS of RMB 1.40/1.71/2.04. At present, the corresponding PE of A-share price is 24 / 20 / 17 times, giving a “buy” rating.
Risk tips: 1. The price of chips, memory and other cost side increases; 2. The risk of intensified market competition; 3. The development of downstream cloud computing, AI and other industries is less than expected
