Hong Kong Stock Concept Tracking | Zhejiang Haikong Nanke Huatie Digital Intelligence & Technology Subsidiary Signs 36.9 Billion Computing Power Service Agreement IDC Spark Investment Boom (with concept stocks)

Zhejiang Haikong Nanke Huatie Digital Intelligence & Technology announced yesterday that its subsidiary signed a 36.9 billion yuan five-year computing power service agreement with Hangzhou X Company. The institution pointed out that after the integration of DeepSeek into top apps such as WeChat, there has been a continuous increase in demand for computing power for national-level application models, leading to a significant growth in inference and other computing power requirements. This presents a major development opportunity for the computing power industry. Recently, Microsoft, Amazon, Google, and Meta disclosed their latest financial results, with the combined capital expenditures of the four tech giants increasing by 77% year-on-year in Q4, mainly supporting the construction of cloud computing, AI, and other infrastructure. Meanwhile, the outlook for future capital expenditures remains positive, as overseas CSPs have not slowed down their capital expenditure pace despite the launch of DeepSeek V3 and R1 models. Instead, they have increased relevant investments. Domestic CSPs are also expected to follow suit in order to maintain a competitive advantage and increase their investments in the AI field. Moreover, as AI application scenarios accelerate their adoption, this will also drive the demand for computing power. Alibaba has significantly increased its investment in AI infrastructure, and domestic CSP companies are expected to actively follow suit, potentially replicating the IDC investment boom seen during the "Internet+" era. Reflecting on the "Internet+" era, where the application scope of mobile internet expanded from the consumer end to the industrial end, the current scenario of actively seeking landing paths and expanding application areas for AI large models bears a striking resemblance. By providing cloud computing capabilities, CSP companies have achieved substantial revenue growth. In the early stages of the "Internet+" era, although the specific business landing models were uncertain, CSP companies actively invested in IDC to avoid falling behind their peers and to benefit from the high certainty of cloud revenue from IDC investments. This push led to a CAGR of over 30% in the IDC market from 2015 to 2018. Under the impetus of Alibaba's significant increase in AI infrastructure investment, other CSP companies such as Tencent and Byte will simultaneously increase their investments in AIDC, driving demand improvement in the domestic AI computing power industry chain. China Securities Co., Ltd. noted that DeepSeek has publicly released profit cost ratios, with a theoretical cost rate of up to 545%, enabling model manufacturers to achieve a profitable model. From the industry demand perspective, there is significant room for cost reduction and capacity enhancement in the model sector, which is expected to accelerate the release of downstream AI application demand and further open up market potential. From the application scenario perspective, industries with strong initiative and rich scenarios such as government affairs, finance, and healthcare are expected to be the first to achieve commercial landing. IDC-related industry chain Hong Kong stocks: GDS-SW(09698): As of the third quarter of 2024, the company's total service capacity has reached 882,200 square meters, with a promised usage area of 785,700 square meters, a commitment rate of 92.7%, and a service area of 647,500 square meters. The area already in use is 481,800 square meters, with a service utilization rate of 74.4% and an area under construction of 234,700 square meters. In China, the total service area is 716,000 square meters, with a promised usage area of 626,800 square meters, a commitment rate of 92.1%, an area already in use of 438,700 square meters, and a service utilization rate of 73.6%. The company's overseas business is growing rapidly. By 2024, it will be a year of accelerated expansion overseas for the company. As of the end of the third quarter, the company's IT load in overseas data centers has exceeded 100 megawatts, with a commitment to increase by another 300 megawatts within 18 months. Currently, the company's overseas business has a total IT commitment load of 431 megawatts. The company's overseas business entity is GDSI, which by the end of the third quarter of 2024, had developed data center business in Hong Kong, Singapore, Malaysia, Indonesia, Thailand, and Japan. The total IT load in Hong Kong is 66.4 megawatts, Singapore 20 megawatts, Malaysia 881.2 megawatts, Indonesia 72.4 megawatts, Thailand 120 megawatts, Japan 36 megawatts, with a total overseas IT load of approximately 1.2 gigawatts. Haitong stated that the company is in a leading position in the Chinese IDC industry, both in terms of data center scale and rankings in third-party consulting reports. China Securities Co., Ltd. pointed out that the combination of stock consumption and high power demand release could push the IDC industry into a new cycle. KINGSOFT CLOUD(03896): Founded in 2012, the company relies on more than 30 years of enterprise service experience from the Kingsoft Group to gradually build a complete cloud computing infrastructure and operation system. By integrating advanced technologies such as big data, AI, and edge computing, it provides over 150 multi-domain solutions and high-quality cloud services to over 500 premium customers. The company's business is divided into public cloud services and industry cloud services. Public cloud services include comprehensive cloud services such as cloud computing, storage, and distribution, with modular cloud products including unified IaaS infrastructure, PaaS layer, and SaaS application software; industry cloud services are mainly deployed and operated locally by customers, with the enterprise-level private cloud Galaxy Stack platform optimized for privatization scenarios on the basis of mature public cloud technology architecture. In 2023, the company fully embraced the new era of AI, building a full-stack public cloud infrastructure for AI across all industries, enhancing the construction of high-performance computing power and network, cloud-native infrastructure, AI platform capabilities, and industry application capabilities.