Inspur Information (000977) Incident Review: Optimizing the Asset and Liability Structure of the Rights Issue to Support the Continuous Expansion of Business Scale in the Future

Event: On July 17, the company issued a plan for the public offering of securities through a rights issue. The plan is based on the total number of shares after the market close on the equity registration date to implement the rights issue plan.

5 shares will be placed to all shareholders, and the total amount of funds raised (including issuance costs) will not exceed 2 billion U.S. dollars. After deducting the issuance costs, all the funds will be used to repay bank loans and supplement liquidity, of which 600 million will be based on the actual time of the raised fundsAnd the maturity time of the loan are used to repay the bank loan, and the remaining funds are used to supplement the working capital in consideration of its own capital situation.

Opinion: Allotment of shares to optimize the structure of assets and liabilities, to support the continued expansion of business scale in the future. The scale of business continues to expand and boost the asset-liability ratio. In order to meet operating needs, it is imperative to reduce the asset-liability ratio.

1) In 2016-2018, the company’s asset-liability ratio was 56.

49%, 59.

28% and 63.

63%, 2019Q1 company assets and debt restructuring 62.

28%. Although the company increased its repayment efforts at the end of 2018 and early 2019 to optimize the upstream and downstream accounts, the business scale of the restructured company continued to expand, and the company’s asset-liability ratio showed an upward trend.

2) From 2016 to 2018, the company’s financial expenses continued to increase, from 1 in 2016.

1.4 billion increased to 4 in 2018.

24 ppm, the company’s financial expense ratio growth rate in 2016 and 2018 was 0.

90%. Although the financial expense ratio has not increased compared to 2016, the scale of operating income has increased, the size of accounts receivable has continued to expand, and the short-term scale brought by the capital turnover has led to a significant increase in the absolute amount of financial expenses.

We believe that because the company’s downstream is mainly large Internet customers, Internet customers have higher requirements for the stability of the supplier’s own operations, continuity and stability of supply, and the continued increase in the asset-liability ratio will affect the company’s futureAs business expands overseas, it is imperative to reduce the gearing ratio.

In addition, as the increase in the asset-liability ratio will also cause the company to face increased waste of capital costs when it grants credit and loans to banks, and it will affect the company’s performance, the company also needs to reduce the asset-liability ratio to reduce financial costs.

Allotment is the best option under limited selection.

Because the company’s upstream customers are mainly international giants, and its downstream customers are mainly domestic Internet companies, the company faces the reality of short upstream payment cycles and long downstream settlement cycles in the payment and settlement cycle, so the company’s business scale continues to expand.The demand for funds will continue to increase.

And from the perspective of operating scale, in order to better match the cyclical mismatch of upstream supply and downstream demand, the company generally adopts the operating strategy of regular stocking, and through the continuous increase of business scale, the company’s stocking scale will continue to increase.

In view of the company’s business development needs, the company’s type of capital requirements are mainly liquid funds that support the company’s operations.

Therefore, combining the type of capital requirements with the current market environment, the way of allotment is the best option for the company under limited choices.

This year is a small year and next year is a big year.

Taking into account the increase in capital expenditures of cloud computing manufacturers in 2018, which drove a significant increase in server procurement, the overall procurement growth of cloud computing vendors this year has shifted slightly.

However, it is expected to accelerate significantly next year, mainly due to the following reasons: 1) Increased purchase of AI servers.

The demand for intelligent information, represented by intelligent recommendations, 武汉夜生活网 small videos, etc., will continue to increase the demand for AI computing. Long sleeves will increase the proportion of AI computing. In the future, the purchase of AI servers will continue to accelerate; 2) 5G, edge computing.

The commercialization of 5G will further promote the demand for computing power, and the construction of edge computing scenarios will open up the edge computing server market.

The expansion of data volume, increased computing power requirements, and rich computing scenarios all work together to multiply the computing market demand, and the robes will gradually increase server purchases.

3) Cloud computing vendors continue to expand.

According to IDC data, Alibaba Cloud ranked third globally in 2018 with a market share of 7.

At 7%, there was a gap between the earlier AWS and Azure.

It 无锡桑拿网 is expected that Ali will continue to expand its investment in cloud computing in the future and increase its global market share.

Inspur, as the main supplier of Alibaba Cloud, will continue to benefit.

To sum up the profit forecast and investment rating, we look at the future development of the company. It is expected that the company’s EPS for 2019-2021 will be 0.

70, 1.

00 and 1.

44 yuan / share, maintain “overweight” rating.

Risks indicate that the overall development of the server market is less than expected; the server business is fiercely competitive; the company’s overseas market expansion is less than expected; the artificial intelligence business is less advanced than expected.