Starnet Ruijie (002396) Company Comments: Q3 Performance Forecast Exceeds Expectations Autonomous Controllable + Cloud Computing Opens Growth Space
Event: The company released a three-quarter report notice, which is expected to return to net profit in the first three quarters of 20194.
600 million to 500 million, an annual increase of 15% -25%; net profit in the third quarter of 2019 was 3.
460,000 yuan, an increase of 7 in ten years.
The Q3 performance forecast exceeded market expectations, the business structure continued to be optimized, and the profitability was significantly improved. The company’s net profit growth rate for the first three quarters of 2019 is expected to be 15% -25%, and the Q3 net profit forecast range is only 3.
460,000 yuan, an increase of 7 in ten years.
2%, the growth rate is 14.
2%, the market was worried about the company’s high base in Q3 2018 (18Q3 net profit was 2).
USD 8.5 billion, with investment income and minority shareholders’ equity combined), the company is generally cautious about the company’s expected growth in 19Q3.
However, according to the performance forecast, 19Q3 is not only an exception, but also the average growth rate variable.
2%, exceeding market expectations.
According to the company’s past years, the performance volume of Q3 and Q4 is basically the same, but Q3 was large last year (2.
800 million), Q4 small (1.
In the case of 7.9 billion U.S. dollars, assuming that the 19Q4 performance remains at the Q3 level, it is expected that the performance will exceed market expectations (WIND unanimously expects 19 years 杭州桑拿网 net profit to be 7.
The company’s 2019H1 revenue was 33.
27 ppm, a decrease of 5 per year.
43%, mainly due to the company’s low-margin business scale and decline in revenue from exports of US products.
Among them, enterprise-level network equipment revenue was 15.
76 ppm, an increase of 19 in ten years.
56%; network terminal revenue 5.
76 ppm, an increase of 46 in ten years.
97% (mainly due to the increase in the amount of network terminal products sold to customers in the financial industry (banking, insurance)); communications products revenue6.
4 ‰, a decrease of 33 per year.
74% (mainly due to sales of smart home gateway products and 4G products in the United States exported less than the same period last year); other business revenue4.
47 million, a decrease of 41 every year.
04%; Video information application revenue is 87.29 million yuan, an annual increase of 5.
The company’s 2019H1 returns to its mother’s net profit1.
5.7 billion, an increase of 34 in ten years.
22%; net profit after deduction 1
1.9 billion, an annual increase of 133.
Interim performance in the developing country notice interval (30% annual growth?
(40%) median, in line with market expectations, net non-profit increased by 133.
34%, reflecting the improvement of the company’s profitability (the company’s gross profit margin was 34.
6%, a substantial increase of 7 per year.
42 goals), stemming from: the company ‘s relatively high gross profit business income has grown rapidly, while its gross profit has continued to improve; gradually, the proportion of low gross profit businesses has decreased, but its gross profit margin has improved significantly.
In terms of specific business, the gross profit margin has been significantly improved, of which: the gross profit margin of enterprise-class network equipment44.
07%, a slight increase every year; gross margin of network terminals is 27.
57%, an increase of 3 per year.
44 units; gross profit margin of communications products 20.
05%, a significant increase every year 6.
28 units; gross profit margin of other businesses 26.
58%, a significant increase of 11.
62 levels; video information application gross margin 57.
6%, a significant increase of 12 per year.
The direct beneficiaries of the wave of “network cloudification and edge computing” have opened up the company’s future growth space. The company is one of the leading domestic ICT application solution providers and one of the enterprise network equipment leaders.
The company’s operating style has always been stable, and its revenue and profits have continued to increase over the past eleven years, with a compound growth rate of revenue from 2007 to 201819.
8%; 2007-2018 compound growth rate of profit reached 22.
We believe that reducing the company ‘s benefit from network equipment to IOE and import substitution, and the logic is continuing and deepening, and safe and controllable products are expected to open new space in the future; substitution, company products and solutions are expected to enter the network cloud, SDN,New directions such as edge computing are constantly expanding and gradually enter the harvest period.
Profit forecast and investment advice: The company is one of the leading enterprises in enterprise network equipment. The logic of de-IOE and import substitution is still continuously strengthened, and it will benefit significantly from the construction of network cloudification / edge computing in the future. In addition, the cloud desktop business has good growth.Safe and reliable products are expected to open up new growth space, and the growth of various business lines is good. At the same time, the business structure is continuously optimized, and it is expected that profitability will continue to increase in the future.
Considering the optimization of the company’s business product structure and the significant increase in gross profit margin, we have revised the company’s profit forecast for 2019-2021 from 6.
92 billion, 8.
02 billion and 9.
12 trillion is raised to 7.
3 billion, 9.
300 million and 11.
500 million US dollars, corresponding to 19 years 24.
5x PE, upgrade to “Buy” rating.
Risk warning: Sino-U.S. Trade war leads to decline in sales of US products, new business expansion is less than expected, upstream raw materials prices rise, market competition prices drop