Huajin Securities: Give a buy rating to Unisplendour shares

Li Hongtao of Huajin Securities Co., Ltd. recently conducted research on Unisplendour shares and released a research report "Market Pressure Performance is Stable, International Business + AI Becomes a New Growth Point", this report gives a buy rating to Unisplendour shares, and the current stock price is 20.95 yuan.

Unisplendour(000938)

Investment Highlights:

Event: On April 30, 2024, the company released its 2023 annual report and 2024 first quarter report. In 2023, the company will achieve operating income of 77.308 billion yuan, a year-on-year increase of 4.39%, and a net profit attributable to the parent company of 2.103 billion yuan, a year-on-year decrease of 2.54%. In the first quarter of 2024, the company achieved operating income of 17.006 billion yuan, a year-on-year increase of 2.89%, and net profit attributable to the parent company of 414 million yuan, a year-on-year decrease of 5.76%.

Event Analysis:

Revenue grew steadily, and R&D efforts continued to increase. As a global leader in the construction of next-generation cloud computing infrastructure and intelligent application services for the industry, the company provides full-stack ICT infrastructure and services such as intelligent networking, computing, storage, cloud computing, security and intelligent terminals. In 2023, the company achieved operating income of 77.308 billion yuan, a year-on-year increase of 4.39%, of which the ICT infrastructure and service business achieved revenue of 51.506 billion yuan, a year-on-year increase of 10.15%, accounting for 66.63% of operating income, net profit attributable to the parent company of 2.103 billion yuan, a year-on-year decrease of 2.54%, a non-net profit margin of 1.675 billion yuan, a year-on-year decrease of 4.80%, and a gross profit margin of 19.60%. In the first quarter of 2024, the company achieved operating income of 17.006 billion yuan, a year-on-year increase of 2.89%, and net profit attributable to the parent company of 414 million yuan, a year-on-year decrease of 5.76%. In 2023, the operating income of Xinhua III, a holding subsidiary, will reach 51.939 billion yuan, a year-on-year increase of 4.27%, and the net profit will be 3.411 billion yuan. In 2023, the company will invest 5.643 billion yuan in R&D, a year-on-year increase of 6.50%, with 7,693 R&D personnel, accounting for 40% of the company's total employees, and a total of more than 14,000 patent applications, of which more than 90% are invention patents, and it has participated in 3 published international standards, 65 national standards, and 115 industry standards.

Build a cloud-intelligent native digital platform to seize the highland of AI computing power. In 2023, the company launched the "AIGC Open Strategy" to comprehensively lay out the AIGC field, and released a series of products such as the "Baiye Lingxi LinSeer" private domain model, the Baiye Lingxi large model enabling platform, and the Baiye Lingxi AI assistant. The company has launched the world's first single-chip 51.2T800GCPO silicon photonics data center switch, 800G standard switch, and a new generation of intelligent computing AI core switch, fully realizing the three major requirements of intelligent computing network: high throughput, low latency, and green energy saving. Released the All-Optical Network 3.0 solution, enabling users to solve multiple requirements with a single architecture. The company has launched routers such as CR16005E-F and CR16010E-F, which continue to make breakthroughs in the field of operators, and have won bids for a number of important projects in China Telecom, China Mobile, and China Radio and Television. Launched a variety of GPU servers and corresponding liquid-cooled models, H3CUniServerR5350G6, and an AI one-stop development platform for AIGC scenarios to help enterprises implement AIGC applications. Released the new generation of Oasis Platform 3.0 to form the integration capability of product + solution + service to help customers continue to innovate their business. Released the cloud-native full-link observation platform to build the advantages and capabilities of cloud-native application operation and maintenance. Launched a new generation of M9000-X flagship firewall, application delivery security gateway products, AIGC large model security solutions, data security solutions, Internet of Vehicles security solutions and other security solutions, fully empowering various security application scenarios.

Deeply cultivate the digital transformation of the industry, and accelerate international business expansion. In 2023, the company ranked second in China's Ethernet switches, enterprise switches, data center switches, campus switches, enterprise routers, x86 server markets, GPU server markets, and hyper-converged markets with market shares of 32.9%, 34.2%, 28.4%, 36.8%, 30.9%, 15.8%, 19.7%, and 18.8%, respectively, and China's enterprise WLAN market and blade server markets, with 27.4%, Ranked first with a market share of 51.7%. The company has served more than 10,000 enterprises in their digital transformation, including more than 300 Fortune 500 companies, more than 400 Fortune 500 companies in China and more than 90% of central enterprise customers. In 2023, H3C will continue its global layout, accelerate the expansion of overseas markets, and release a new overseas strategy. It has cooperated more extensively and deeply with local governments, education, medical care, operators, and enterprises in Southeast Asia, the Middle East, and Central Asia in the field of digital transformation. Participated in projects such as NEOM New City in Saudi Arabia to provide high-performance products and solutions for local operators in Thailand and Kazakhstan. The overall sales scale of H3C International continued to expand, with operating income reaching 2.202 billion yuan, a year-on-year increase of 19.70%.

Investment suggestion: We believe that the company will directly benefit from the market increment brought about by the explosion of digital economy and computing power, and will maintain high growth for a long time, but due to the external environment, we adjust the company's profitability and forecast the company's revenue in 2024-2026 to be 896.77/1013.35/109.442 billion yuan, a year-on-year increase of 16.0%/13.0%/8.0%, and the company's net profit attributable to the parent company is 25.87/33.92/3.636 billion yuan, a year-on-year increase of 23.0%/ 31.1%/7.2%, corresponding to EPS0.90/1.19/1.27 yuan, the current market value corresponding to PE is about 23.2/17.7/16.5 (assuming 100% performance consolidation of Xinhua III in 2024, the company's net profit attributable to the parent company in 2024-2026 is expected to be about 42.53/50.58/5.302 billion yuan, PE14.1/ 11.8/11.3);Considering the company's leading position in the industry and business development, we believe that the company is currently undervalued, and maintain a "buy-B" rating.

Risk warning: new product research and development is less than expected, market competition continues to intensify, accounts receivable recovery is not timely, and the acquisition of Xinhua III equity is less than expected.

According to the calculation of the research report data released in the past three years, the research team of Huang Weihan of Ping An Securities has conducted in-depth research on the stock, with an average forecast accuracy of 76.46% in the past three years, and its forecast attributable net profit in 2024 is 2.475 billion yuan, and the predicted PE is 24.08 based on the current price.

The breakdown of the latest earnings estimates is as follows:

A total of 8 institutions have rated the stock over the last 90 days, with 5 having a buy rating and 3 having an overweight rating, with an average institutional price target of 29.45 over the last 90 days.

The above content is compiled by Securities Star based on public information, generated by an algorithm (Network Information Calculation No. 310104345710301240019), and has nothing to do with the position of this site, if there is a problem with the data, please contact us. This article is a compilation of data and does not constitute any investment advice for you, investment is risky, please make a cautious decision.