Inspur Digital Enterprise (00596) has issued a profit warning, projecting a significant decline in earnings for the six months ending June 30, 2024, with net profit attributable to shareholders expected to range between 60 million and 70 million yuan.
According to the company's preliminary assessment of its unaudited consolidated management accounts, revenue for the reporting period is expected to be between approximately 3.7 billion and 3.8 billion yuan, a decrease of about 11.6% to 14.0% compared to the 4.3 billion yuan reported in the same period in 2023. Net profit attributable to owners of the company is anticipated to be between 60 million and 70 million yuan, representing a substantial decline of 61.1% to 66.7% from the 180 million yuan recorded in the prior year's corresponding period.
Understanding the Key Drivers of the Decline
The drops in both revenue and net profit are primarily attributed to three key factors. First, the company has strategically adjusted its business layout, focusing on the core AI sector and optimizing its order structure by actively reducing the scale of orders for traditional Internet of Things (IoT) solution projects. Second, stricter customer compliance requirements and heightened product demands driven by AI technology advancements have led to extended delivery cycles for certain projects, slowing the pace of revenue recognition. Third, the company has continued to increase its investments in AI to implement its long-term AI-native strategy, placing temporary pressure on profitability.
Positive Momentum in AI and Smart Computing
Despite the overall profit warning, the company highlighted strong momentum in its AI application and smart computing center businesses, with steady growth in business scale. This growth is driven by the accelerated implementation of the Group's "1321" strategy. The company has been refining its enterprise AI-native product system, which is based on a "four-layer, three-drive" core architecture encompassing models and data, digital intelligence platforms, intelligent applications, and intelligent interaction. Key products, such as the Inspur Haiyue Mano Intelligent Execution System, have been deployed in multiple central and state-owned enterprises, fueling rapid growth in the AI application business. Additionally, the domestic smart computing center business is deepening its layout around the eight major national computing hub nodes under the "East Data, West Computing" initiative, while the overseas business focuses on Southeast Asian core markets. The steady advancement of computing infrastructure construction has led to a continuous increase in the company's market share in regional computing services.
Strategic Outlook and Future Direction
The Group confirms it will continue to adhere to its "1321" strategy, strengthening strategic focus, optimizing its business structure, and driving internal quality improvement. The company aims to enhance the market competitiveness of its software and AI products, accelerating its progress toward becoming a world-class provider of enterprise software and enterprise AI products and services. The board of directors and management remain confident in the company's future development.
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