The Zhitong Finance App learned that Guolian Securities released a research report saying that the total revenue of the computer industry in '23 was about 1181.2 billion yuan, a year-on-year growth rate of 9.54%, and total net profit to mother was about 30.1 billion yuan, an increase of 8.77% over the previous year. Looking at segments, profits from smart security, financial IT, and geographic information increased markedly in 2023; industrial software achieved relatively rapid growth in the first quarter of 2024. The bank continues to be optimistic that AI, data elements, and industrial digitalization will bring solid growth opportunities to the computer industry. The computer industry will also help the development of future industries such as the low-altitude economy and quantum technology. Overall performance is expected to recover further in 2024. Leading manufacturers may increase their market share and maintain the computer industry's “better than the market” rating.

Recommended attention: Hikvision (002415.SZ), Jinshan Office (688111.SH), Zhongke Shuguang (603019.SH), Central Control Technology (688777.SH), Zhongke Star Map (), Hang Seng Electronics (DAB), etc. 688568.SH 600570.SH

The views of Guolian Securities are as follows:

The market has shown a “W” trend since the beginning of the year, and the holding ratio has continued to decline

Since the beginning of 2024, the computer sector has shown a “W” trend. From the beginning of 2024 to April 30, the Shenwan Computer Index fell 13.52%, outperforming the Shanghai and Shenzhen 300 Index by 18.57 pcts, ranking 30th among Shenwan's 31 sub-industries. By the end of the first quarter of 2024, the heavy stock ratio of computer sector funds was 3.60%, ranking 10th among Shenwan's 31 tier-1 industries; the heavy stock ratio fell 1.37 pct month-on-month, ranking 29th in the month-on-month growth rate, falling for four consecutive quarters; the heavy stock ratio was 0.25 pct lower than the industry standard, shifting from overallocation to low allocation.

Computer industry performance resumed growth in 2023, and sector performance was divided

The total revenue of the computer industry in 2023 was about 1181.2 billion yuan, a year-on-year growth rate of 9.54%, and total net profit to mother was about 30.1 billion yuan, up 8.77% year on year. The profit growth rate was slightly lower than the revenue growth rate. Summarizing the 2023 performance of Shenwan Computer's 348 A-share listed companies (excluding ST), the net profit of 179 companies increased, and the net profit of 169 companies decreased. Demand for AI in the server industry is yet to be released, basic software performance is declining, cybersecurity performance continues to be under pressure, smart security profits have increased markedly, medical informatization is still in the repair process, geographic information profit performance is better than revenue, financial IT profits have improved markedly, and industrial software and power informatization are growing steadily.

The overall profit of the computer industry declined significantly in the first quarter of 2024

The total revenue of the Q1 computer industry in 2024 was about 242.6 billion yuan, a year-on-year growth rate of 9.63%, and total net profit to mother was about 303 million yuan, a year-on-year decrease of 95.13%. The overall profit decline was significant. The performance of the server industry is fragmented. Losses in the basic software sector have narrowed, cybersecurity continues to lose money, profits in the smart security industry are relatively stable, medical informatization performance is basically flat, geographic information performance has declined, financial IT profits are under pressure, industrial software has achieved rapid growth, and power informatization profits have declined.

Investment advice: it is recommended to focus on leading manufacturers on the booming circuit

Looking at segments, profits from smart security, financial IT, and geographic information increased markedly in 2023; industrial software achieved relatively rapid growth in the first quarter of 2024. The bank continues to be optimistic that AI, data elements, and industrial digitalization will bring solid growth opportunities to the computer industry. The computer industry will also help the development of future industries such as the low-altitude economy and quantum technology. Overall performance is expected to recover further in 2024, and leading manufacturers may increase their market share.

Risk warning: macroeconomic growth is slowing; supply chain security risks; downstream demand falls short of expectations, etc.