ZHONGJI INNOLIGHT(300308) Zhao Yin Guo Ji·2024-08-09 12:30Investment Rating - The report maintains a "Buy" rating for the company, with a new target price of 150.76 RMB, up from the previous target price of 130.71 RMB, indicating a potential upside of 33.0% from the current price of 113.32 RMB [1][2][3]. Core Insights - The report highlights strong fundamentals in the cloud sector, with major players like Google, Microsoft, Amazon, and Meta collectively spending 52.9 billion USD in capital expenditures in Q2 2024, a 57.1% year-over-year increase, surpassing Bloomberg's consensus estimate of 50.6 billion USD [2][3]. - Despite recent market volatility, the report emphasizes that the primary cloud vendors continue to reaffirm their commitment to significant investments in AI infrastructure to meet growing computational demands [2][3]. - The company is identified as a key beneficiary of the AI investment theme, with its stock currently trading at attractive valuations, projected P/E ratios of 22.8x for 2024 and 15.3x for 2025 [2][3]. Financial Summary - The company’s revenue is projected to grow significantly, with estimates of 23,877 million RMB for FY24, representing a 122.8% year-over-year increase, and 34,149 million RMB for FY25, a 43.0% increase [7][9]. - Net profit is expected to reach 5,462 million RMB in FY24, reflecting a 151.3% increase, and 8,127 million RMB in FY25, a 48.8% increase [7][9]. - The report also notes an increase in gross margin, projected at 33.2% for FY24 and 32.3% for FY25 [7][9]. Market Context - The report discusses the broader market context, noting that concerns over mixed earnings from overseas tech companies and potential U.S. economic recession have led to market fluctuations [2][3]. - It mentions that the recent unexpected interest rate hike by the Bank of Japan has exacerbated market sell-offs, but the strong capital expenditure guidance from cloud vendors remains a positive indicator for the AI sector [2][3].