1. History
In 1999, Sinnet was founded.
In 2000, it obtained the ISP service qualification (Terra Nova has heard of it, right?). It was the leader at that time, even Mobile started from ISP)
In 2001, it obtained the license to operate telecommunication and information service business.
In 2002, the company built its own B2 Internet data center on the second ring road in Beijing, and took the lead in entering the IDC business in Beijing.
In 2007, Beijing East Ring B1 Internet Data Center (IDC) was built and put into operation, with a self-built area of 3,000 square meters.
In 2009, the company's shareholding was restructured and renamed as Beijing Huanxin Technology Co.
In 2010, the Jiuxianqiao Data Center was built and put into operation.
In 2013, the first phase of the Yanjiao Cloud Computing Base data center was completed and put into operation.
In 2014, the company was listed on the Growth Enterprise Market (GEM), with stock code 300383, and stock name Huanghuanxin.com.
In 2015, the company wholly acquired Zhongjin Yunwang and Wushuang Technology to enter the field of big data analytics.
In 2016, the company signed an agreement with Amazon AWS to operate AWS China regional cloud services; the first phase of the Fangshan Cloud Computing Base project was successfully topped out, and Jiuxianqiao Phase II and Taiheqiao Data Center were put into operation.
In 2017, the Shanghai Jiading Cloud Computing Base was put into operation, the cloud computing business developed and grew, and a cloud service license was obtained
In 2018, the Fangshan Data Center was newly completed and put into operation.
2. Operational Status
Data from Flush
(1) IDC Business
Currently, it owns 8 data centers in Beijing, Tianjin, Hebei and Yangtze River Delta, with a scale of nearly 400,000 sqm and a capacity of about 50,000 cabinets; and it has 5 new data center projects under construction. data center projects, with a design capacity of about 50,000 cabinets. the IDC business is still expanding, and the company continues to grow.
(2) Cloud Computing Business
AWS China cloud service operated by the company is progressing well, and it can provide 175 related services, which is also the major part of the company's business.
The subsidiary, Halo Cloud Data, provides value-added services to customers based on Amazon AWS cloud services, and is on-line with the INSPIRE platform to empower the cloud ecosystem.
Subsidiary Wushuang Technology, providing SaaS services to customers, SEM multi-channel management system docking Baidu Sogou, Google, 360, a wide range of customer sources, covering the 2B and 2C markets, is a certain scale of domestic service providers in niche areas. Recently introduced the war investor Kaicheng International Holdings.
3. Valuation level
In order to compare with peers in the international IDC industry, using the EV/EBITDA valuation method (enterprise value multiples), with the 2019 report as the benchmark, the average value of the world's major IDC companies is 19 times, with an average growth rate of about 13%; the leading Equinix is 20 times, with a growth rate of 11%; Digtal Realty is 18 times, with a growth rate of 8%; our country's leading World Wide Data is 29 times (listed in the U.S.), Guanghuanxin.com is 16 times in 19 years, which is significantly undervalued in the industry, and the growth rate has reached 30%, which is in a period of rapid development.
4. Financials
Due to more self-constructed projects, large investment and long cycle, ROE has remained at around 10% in recent years, but net profit and revenue have been able to maintain a certain rate of growth, except that compared to the start-up phase, it has slowed down significantly.
Debt ratio in the last few earnings seasons are maintained at about 35%, still relatively healthy.
Cash flow from the annual report season, is relatively tight, mostly self-built projects, but this year due to the impact of the epidemic, the market demand for big data and cloud computing in this area surge, so this year's results are still very bright.
Now look forward to is the fixed increase landing and new infrastructure Reits issue success, then there will be an opportunity to shift to light assets.
IDC service providers are divided into three categories:
1. Basic telecom operators
Companies: China Telecom, China Unicom, China Mobile .
Characteristics: Have a large amount of infrastructure, have a clear advantage in broadband resources and interfaces, occupy the largest market share, but not the company's core business.
2. Cloud service providers
Companies: Amazon Cloud, Google Cloud, Aliyun and so on.
Characteristics: the main role is to carry their own business needs, the foreign model for the scale of self-built + rent-based, the domestic model for large-scale self-built + rent + **** built.
3. Third-party IDC service providers
Companies: Equinix, World Wide Web, Baoxin Software, Data Harbor, Halo New Network, etc.
These are the most popular IDC service providers in the world.
Characteristics: professional construction and operation and maintenance capabilities, can provide customers with customized services, the future trend is to scale and centralized development.
Huanghuanxin.com is a traditional third-party IDC service provider, the subsequent business growth momentum or need to rely on cloud computing to promote, and now the cloud computing industry is still in the early stages, there is a lot of room for growth, and the future will certainly be able to reach the scale of trillions of dollars, the ceiling is very high, do not have to worry about the industry's development potential.
1. Gross profit margins are higher than peers
Before the SEC also sent a letter asking about the company's gross profit, the company explains that it is due to its own land and real estate, while other companies, such as the data center of the World Wide Data Center is located in the proportion of its own plant is only 9.7%, and the remaining 90.3% is located in the leased data center buildings. The remaining 90.3% is in leased data center buildings.
In addition, another reason is that the company belongs to the retail type IDC, there is no customer identified before the establishment of the data center, data cabinet contracted orders in the continuous expansion of the gradual decline. Therefore, the gross margin of the halo new network compared to Baoxin software, data port, universal data and so on these big wholesalers is higher, they are only 20-30%, but the halo is more than 50%, especially conspicuous.
But it is because of the halo new network belongs to the retail IDC, there is no binding large customers, so the second quarter of the performance growth rate is not expected to be high, wholesale IDC hold thighs although the gross profit margin is not high, but the performance of certainty is relatively strong. So the market funds to chase Baoxin software, data port, to the valuation is also quite high.
2. Good geographical layout
Huanxin's eight data centers are all laid out in and around first-tier cities, and the existing resources can accommodate 50,000 to 80,000 cabinets, and so on the subsequent completion of the project under construction, which is expected to accommodate 100,000 to 150,000 cabinets in three years, the industry's advantage is very significant!
In addition, around the first-tier cities, there are many high-value customers, and after the contract is signed, it is usually a year-round cooperation, and the leasing rate of the cabinets can be better guaranteed, which is conducive to the continuous improvement of the company's profitability.
3. Data center self-build
The company's data center is basically its own land, and compared to its rivals who leased land for development, Halo's amortization and depreciation will be much less, and its financing costs will be much lower, which is one of the reasons Halo is able to maintain a reasonable debt ratio.
Institutions previously predicted that halo's annual net profit in 2020 would be 1 billion, and considering the market's higher sentiment towards technology stocks, it can be valued at 35-40 times PE, so the corresponding reasonable market capitalization range would be 35-40 billion yuan, and the corresponding reasonable stock price range would be 23-26 yuan. Now the stock price is about 22.36 yuan, just back to the reasonable valuation range below. If you are optimistic about the cloud computing + IDC industry, then now consider the halo new network as a configuration position, I think it is very good.
Personal views:
1. quality track
IDC industry is the future of the very high quality of the industry track, trillion level of scale proper, such as halo retail IDC is expected to wait for the flow of the full outbreak of the opportunity to have a better performance, temporarily lagging behind rivals to be less worried about.
As we all know, by the impact of this year's epidemic, the advent of the 5G era is delayed, coupled with the fact that there is no phenomenal cloud application out there, the entire industry is still in the early stages of development, the space is vast.
2. Long-term thinking
Personally, I think that if the halo new network can take 2-3 years, there may be no small gain, 150,000 total cabinet planning, 2021, 2022 retail net profit release will be very good.
Halo is currently the only domestic IDC companies have the conditions to send Reits, the back if the successful issuance, the valuation level can also be improved, in addition to foreign capital is used to use EV/EBITDA valuation, the current halo foreign capital has pricing power, because the domestic growth rate (30%) is higher than foreign (13%), EV/EBITDA multiples are bound to be appropriately higher than the foreign relevant The company.
3. Spin-off listing
In fact, there may be a small egg, that is, Wushuang Technology divested, as a pure SaaS enterprises to go to the Science and Technology Innovation Board (STB) listing to the high valuation pricing of the STB and the imagination, it will certainly significantly increase the valuation of the Halo New Network.
1. The IDC industry in which it operates has a broad outlook and a high ceiling, and is a sunrise industry with policy support.
2. Data center layout in and around first-tier cities, mainly retail, high-value customers, revenue and gross profit is much higher than peers, strong growth capacity.
3. Expansion mode is based on self-build (own land), low financing costs and strong risk resistance.
4. The company's EV/EBITDA multiples are lower than those of its peers, and its valuation is at a reasonably low level, with a certain margin of safety.
1. IDC industry is a heavy asset industry, the data center construction cycle is long and involves a lot of processes, Halo's projects are in the core city near the tightening of policy regulation, which may affect the progress of project delivery.
2. With Amazon AWS cloud services is nothing more than a partnership, the long-term confrontation between the United States and China in the situation may affect the partnership, the current Amazon cloud in China has two partners (the other in Ningxia), does not rule out the possibility of termination of cooperation.
3. Cloud computing development is still looking at 5G, but the impact of this year's epidemic has reduced the speed of 5G construction in the country, so do not rule out the possibility that the subsequent cloud computing business is lower than expected, which will effectively affect the profit growth rate.
Well, the above is my full understanding of the halo new network, shared today, I hope to give you a little thought.