Author|Hengxin

Source|Bowang Finance

Doubling in just two months, the "bullish stock" Sugon has stolen the show.

Since the end of September this year, Sugon's share price has surged continuously, from a low of 34.07 yuan, soaring all the way to a high of 82.5 yuan in two months, with a market capitalization exceeding 120 billion yuan, setting a historical high. As of the close of the 18th, it was reported at 71.35 yuan per share. Although there has been a drop, it is still favored by the market.

Source: Baidu Stock Market

01

Stable growth for 10 consecutive years, leading the industry

According to public information, Sugon was established in 1996, originating from Dawn One, the core product of the 863 Program. It is a high-tech enterprise under the Chinese Academy of Sciences. After more than 20 years of development, it has become an important enterprise in the domestic high-end computing field.

As a technology enterprise with technological innovation as its gene, Sugon has deep technical accumulation and a leading market share in high-end computing, storage, security, data centers, and other fields. It fully leverages its advantages in high-end computing to layout technical research and development in intelligent computing, cloud computing, big data, and other fields, creating a computing industry ecosystem that provides solid and reliable support for scientific research exploration and innovation, industry informatization construction, industrial transformation and upgrading, and digital economy development.

The development of Sugon in recent years has been obvious to all. From 2014 to 2023, Sugon's operating revenue and net profit achieved 10 consecutive years of growth; over the past five years, the compound annual growth rate of profits was approximately 18%, significantly exceeding the economic growth rate over the same period (the compound annual growth rate of nominal GDP was 6.5%); in 2024, the growth trend continued, with total operating revenue of 8.041 billion yuan in the first three quarters, a year-on-year increase of 3.65%, and net profit attributable to shareholders of listed companies of 770 million yuan, a year-on-year increase of 2.57%, demonstrating a significant stabilizing effect.

The important reason why Sugon can achieve such rapid development lies in the high alignment of its business development with national strategies.

Fully aware of the importance of the development of the artificial intelligence industry, the country has successively issued a series of policies to promote the construction of information infrastructure nationwide, especially the construction of intelligent computing centers. In April 2020, the National Development and Reform Commission clearly defined the scope of new infrastructure for the first time, incorporating intelligent computing centers as an important representative of computing power infrastructure into the category of information infrastructure; in August 2022, the Ministry of Science and Technology issued the "Notice on Supporting the Construction of Demonstration Application Scenarios for the New Generation of Artificial Intelligence," initiating work to support the construction of demonstration application scenarios for the new generation of artificial intelligence, with the first batch supporting the construction of ten demonstration application scenarios; in February 2023, the Beijing Municipal Bureau of Economy and Information Technology released the "2022 Beijing AI Industry Development White Paper," proposing to support leading enterprises in building large models comparable to ChatGPT, focusing on building an application ecosystem for open-source frameworks and general large models, strengthening the layout of artificial intelligence computing power infrastructure, and accelerating the supply of basic data for artificial intelligence.

It is also driven by top-level design that demand for computing power is growing rapidly. According to the forecast in the "Large Model Landing Application Case Collection (2023)," the compound annual growth rate of global GenAI revenue will reach 42% from 2022 to 2032. The development of large model technology and applications has driven rapid growth in demand for computing power, with governments, enterprises, and universities accelerating the construction of intelligent computing centers. In 2023, the "Action Plan for High-Quality Development of Computing Power Infrastructure" issued by the Ministry of Industry and Information Technology and five other departments proposed that China's computing power scale will exceed 300 EFLOPS by 2025, with intelligent computing power accounting for 35%. On the government side, multiple regions have released development plans for intelligent computing centers, with Shanghai planning for intelligent computing power to account for more than 50% of total computing power by 2025; on the enterprise side, the State-owned Assets Supervision and Administration Commission's special meeting on artificial intelligence proposed that central enterprises should accelerate the layout and development of the intelligent industry, consolidate the foundation for development, and accelerate the construction of a number of intelligent computing power centers.

It is an indisputable fact that despite the continuous growth in demand for high-performance computing and data centers, Sugon still frankly admits that "competition in computing power is intensifying." Fortunately, Sugon has a competitive advantage and is less affected by this.

Li Jun, President of Sugon, stated at the third-quarter performance briefing, "The company operates in a highly competitive industry and has certain abilities in supplier negotiations and customer pricing, but is also subject to certain restrictions. The company's main business has a high technical threshold, and the company has strong advantages in terms of potential competitors entering and substitution capabilities.""

02

Demonstrating technical strength, equity value exceeds 100 billion yuan

In the same "promising" computing power industry, why is Sugon's success irreplaceable?

The reason is also simple. Sugon also has excellent technical strength, which is its greatest confidence.

Since its listing, Sugon has continuously invested heavily in core technology research and development for high-end computing, continuously improving its research and development environment and management system, maintaining a high level of technological innovation capability. In recent years, starting from the needs of the era, industry, and customers in the computing industry, Sugon has adhered to the concepts of innovation and high availability design, continuously improving product performance and enriching product lines to meet the needs of different scenarios.

In the third quarter, Sugon's R&D investment reached 2.444 billion yuan. The fund-raising project for high-end computers, IO modules, and internally installed active management firmware based on domestically produced processors was successfully completed. Intelligent all-in-one products tailored to industry application scenarios were launched for the financial and other industries and implemented in multiple customers. Continuous improvements have been made in component performance management, product stability, high-speed interconnection, and other aspects to enhance product performance, comprehensively upgrading the scalability and manageability of high-end computers, with technical advantages and product influence gradually increasing.

At the same time, facing the large-scale construction demand of intelligent computing centers, Sugon is deeply involved in the construction of digital infrastructure while continuously improving its comprehensive capabilities in intelligent computing center solutions, leveraging multiple advantages such as distributed all-flash storage, immersion liquid cooling, and computing services to empower the digital and intelligent development of multiple regions and industries.

The storage system within the intelligent computing center solution uses fully self-developed ParaStor distributed all-flash storage, which supports high-speed direct data access for AI chips with self-developed technology, optimizes storage and computing coordination, improves overall I/O performance several times, and meets the performance requirements of intelligent computing; the liquid cooling system within the solution, based on years of technical accumulation, realizes liquid cooling for the core components of computing while achieving the application of liquid cooling storage and cooling systems for the first time, significantly reducing energy consumption while greatly improving the overall stability of the intelligent computing system; the computing service platform empowers intelligent computing centers to achieve the transition from software and hardware deployment to application value landing. Currently, the platform has launched model warehouses, development tools, and intelligent applications to help intelligent computing centers improve their operational capabilities.

In addition, Sugon has continuously improved its ecological layout, holding and participating in multiple high-quality assets such as Haiguang Information, Sinomaptek, Sugon Cloud, SinoFude, SinoCleanTech, SinoSkyline, and Sugon Data Innovation, forming a relatively complete computing service ecosystem that can collectively form a complete solution, which is conducive to enhancing its competitiveness. After all, just by taking out Haiguang Information, Sinomaptek, and Sugon Data Innovation alone, the equity value exceeds 100 billion yuan.

In order to further deepen cooperation in artificial intelligence and other fields and strive to achieve more cooperation results, on November 8th and 13th, Sugon successively signed strategic agreements with the Xining Municipal Government and the Jinan Municipal Government, aiming to strengthen strategic alignment, deeply explore cooperation potential, and promote all-round digital empowerment for industrial integration and development.

However, it should be clear that compared with NVIDIA, Sugon still has a large gap, especially NVIDIA's dominant position in the field of graphics processing units. Additionally, from the perspective of share prices, NVIDIA currently has a market capitalization of 3.57 trillion yuan, while Sugon only has 106.1 billion yuan, with a difference of more than an order of magnitude. Li Jun also said, "The company is striving to catch up with overseas advanced products in the fields of data center storage, liquid cooling, networking, etc."

Whether Sugon can become a global technology giant still needs time to test, but at least it has already demonstrated strong potential.