Starnet Ruijie (002396): Cloud Computing Expected to Become a Long-term Profit Growth Point
The event company released its 2019 performance forecast on January 21, 2020.
The company expects to realize net profit attributable to shareholders of listed companies in 2019.
390,000 yuan, an increase of 0% -10% in ten years.
The company’s operating business has developed steadily, continuously expanding research and development promotion and market development efforts, and optimizing business layout and product sales structure.
Brief Comment 1. The company as a whole maintained stable growth, but its profit growth rate was lower than expected.
The company expects to realize a net profit attributable to shareholders of listed companies of 5 in 2019.
390,000 yuan, a year-on-year growth of 0% -10%, 武汉夜生活网 exceeding market expectations.
Our tender company’s single quarter net profit for the fourth quarter of 2019 was 1-1.
590,000 yuan, an average of 11% -44% in ten years.
Affected by the macro economy, the company’s revenue declined for the fourth consecutive quarter from the fourth quarter of 2018 to the third quarter of 2019. However, due to the optimization of the product structure, the proportion of low-margin products has decreased, and the proportion of high-margin products has increased.Interest rates continue to rise.
The company’s annual revenue and profit compound growth in the last 10 years has remained at about 20%, which is significantly faster than the average growth rate of the industry. In the past two years, the company has mainly seized market share. We expect to expand the company to continue to expand.Long time strong growth.
2. Benefiting from the close cooperation between cloud vendors and operators, the company promotes market competitiveness.
Cloud computing has now become a recognized development focus in the global information industry. The company has cooperated smoothly with internally-developed cloud vendors and operators to achieve market share increase in the field of data center switches and continuous improvement in technology and cost control.
In December 2019, the company won two bids of China Mobile’s high-end three-layer switches for 2019-2020 with 30% and 70% shares, and entered the high-end market, reflecting the company’s alternative product competitiveness and technology level. OperatorsMarket share has gradually increased.
The company extends from network infrastructure to solutions, ranks high in the cloud terminal field, and connects the company’s initial education with the subsequent development of the government market. Cloud computing and enterprise communications are expected to become the main driving force for the company’s subsequent development.
3. The company maintains high R & D investment and promotes product upgrades to the mid-to-high end.
The company’s long-term high R & D investment guarantees that the company’s products have sustainable competitiveness, and it performs product transformation and upgrades to the mid-to-high end, reflecting the company’s competitive advantage. 2016?
The compound growth rate of the company’s R & D expenses reached 19 in 2018.
In 2019, the company continued to expand the research and development contributions of smart networks, smart clouds, smart finance, smart communications, smart things, smart entertainment, smart communities and other businesses, providing a full range of technical barriers to the company’s product development, and future growth is expected.
At the Shanghai MWC Conference in 2019, the company demonstrated its core product for network-400G switches, which reflects the company’s breakthrough capabilities in the field of high-end products.
4. Multinational subsidiaries provide high-quality and diversified products, broaden overseas markets, and strive for independent innovation.
Ruijie Networks, as the company’s largest revenue contributor, is expected to surpass SDN / NFV in the future and continue to open up the markets of operators and cloud vendors.
According to IDC data, Ruijie Networks’ Interconnect Exchange gained 10% of the Chinese market in the third quarter of 2019, which increased by 1.
One, surpassing Cisco to rank third, behind Huawei and Xinhua III.
As the second largest subsidiary of the company’s revenue contribution, Shengteng Information has grown strongly and has continued to cultivate in the field of cloud computing and payment. It has ranked first in the Chinese market for 17 consecutive years and ranked first in the Asia Pacific (excluding Japan) market for 7 consecutive years.
In addition, the company actively expands its overseas business and has established wholly-owned subsidiaries in Malaysia, wholly-owned subsidiaries in Turkey, and wholly-owned subsidiaries in Japan.
In terms of new products, the company has launched localized cloud desktop solutions using domestic chips such as Loongson and Zhaoxin. Switch products and thin terminal services are also expected to achieve breakthroughs and achieve global expansion.
5. Revise down the profit forecast and downgrade to “overweight”.
Combined with the performance forecast, we estimate that the company’s net profit attributable to mothers in 2019, 2020 and 2021 will be 6 respectively.
100 million, 7.
300 million, 8.
6 ppm, down by 15%, 17%, and 19% from the previous values. The current market value corresponds to PE of 34X, 29X, and 24X in 2019, 2020, and 2021, respectively, and the rating is downgraded to “overweight”.
6. Risk warning: The strong bargaining power of large customers such as cloud vendors and operators leads to the decline of the company’s gross profit margin; the company’s overseas expansion is less than expected.