Donghua Software (002065): Cooperate with Huawei to Create “Pengxiao” Server to Promote Ningbo Kunpeng 5G Industrial Ecological Construction
Event: The company announced on the evening of January 9 that it had signed strategic cooperation framework agreements with six banks including Ningbo Bank, Ningbo Industrial Internet Research Institute, Ningbo Dongtou Group, Ningbo Mobile, Ningbo Telecom, and Ningbo Unicom, and invested with Ningbo Big DataDevelopment Co., Ltd. signed a strategic cooperation memorandum, and gradually promoted the “5G + Pengxiao” ecological construction and layout, to help Ningbo’s “246” trillion-level modern industry cluster development, and further accelerate Ningbo Kunpeng’s 5G industrial ecological construction.
Opinion: Work with Huawei to create a “Pengxiao” server.
According to a series of media reports from Ningbo Municipal Bureau of Economics and Information Technology, China Ningbo Network, etc., the opening ceremony of Ningbo Kunpeng Ecological 天津夜网 Industrial Park and the launch of the “Pengxiao” server were officially antiqued in Ningbo on January 9.
The company and Huawei jointly announced that the first batch of Ningbo-made servers based on Kunpeng processors-“Pengxiao” has completed compatibility with operating systems, databases, middleware, and software and hardware devices such as scanners and printers.
Among them, the first batch of Ningbo self-produced servers were applied in the Municipal Affairs Cloud Center in early January.
In the future, the company will cooperate with Huawei to create Ningbo Kunpeng industrial ecology, and give full play to the advantages of software and big data to realize the adaptation of external equipment, application software and “Pengxiao” servers through software.
Jointly promote the ecological construction of Ningbo Kunpeng’s 5G industry.
In addition to the launching ceremony of the “Pengxiao” server, there are also the opening ceremony of Ningbo Kunpeng Ecological Innovation Center and the opening ceremony of Ningbo Kunpeng Ecological Industrial Park.
During the opening ceremony, the company signed agreements with Bank of Ningbo, Ningbo Industrial Internet Research Institute, Ningbo Dongtou Group, Ningbo Big Data Investment Development Co., Ltd., and China Mobile, China Telecom, and China Unicom Ningbo Branch to accelerate Ningbo Kunpeng5G industry ecological construction.
According to the Ningbo Municipal Bureau of Economics and Information Technology, Ningbo Kunpeng Computing Industry is a new engine for Ningbo to build a “246” trillion-level modern industrial development. It is estimated that by 2025, Ningbo Kunpeng’s computing industry will reach 50 billion yuan.
As the core partner of Kunpeng’s computing industry, the company is expected to fully benefit from the construction of Kunpeng’s 5G industry ecology.
Advance performance is mainly caused by impairment of goodwill.
The company recently announced that it expects to achieve a net profit of 600-700 million in 2019, at least 26% -13% per year.
The initial performance is that the performance of some of the acquired subsidiaries did not meet expectations, and the company estimates that the amount of goodwill impairment provision will be 300 million to 400 million US dollars.
Investment suggestion: The company’s strategic cooperation with Huawei is expected to fully benefit from the construction of Kunpeng’s 5G industrial ecology. We are optimistic about the company’s future development prospects, and it is expected that the EPS in 2019 and 2020 will be 0.
43 yuan, maintain Buy-A rating, 6-month target price of 13 yuan.
Risk reminder: the risk of goodwill impairment; the progress of innovation exceeds expectations; the progress of cooperation with Huawei is lower than expected.