Starnet Ruijie (002396) company comment: network equipment + cloud desktop core assets long-term growth logic unchanged

Starnet Ruijie (002396) company comment: network equipment + cloud desktop core assets long-term growth logic unchanged

Event: The company released a performance forecast, and it is expected that the net profit attributable to mothers in 2019 will be 5.

8 billion-6.

390,000 yuan, an increase of 0-10% in ten years.

The performance is lower than market expectations. Without changing the long-term growth trend, the company expects its net profit to be 5 in 2019.


3.9 billion, intermediate level 6.

1 ppm, maintaining steady growth, lower than market expectations.

Mainly due to the decrease in non-recurring income, the company’s non-recurring income in 2018 was 1.

250,000 yuan, 46 million yuan in non-recurring income in the first three quarters of 19, and government subsidies are expected to decrease in 19Q4.

At the same time, it is also related to factors such as the increase of the company’s Q4 accrued bonus fees, and the early closing of the Spring Festival operator’s account.

Assume that non-recurring income of 50 million in 19 years, the 19-year deduction of non-net profit median variable.

5 ppm, an annual increase of about 24%, still maintaining rapid growth.

Focusing on the structure, the company’s two core assets, Ruijie’s enterprise network equipment and Shengteng’s cloud desktop, are in line with expectations, and growth is expected to be better in the next few years.

The core logic of the company’s continued growth lies in cloud computing + Xinchuang.

First, the company is a high-quality company in the cloud computing high-quality 厦门夜网 track. The white box penetration of data center switches has increased + the operator’s high-end market has broken through. The industry and company’s upward trend has remained unchanged.Increasing penetration + Xinchuang blessing + company share increase, the point remains the same!

Optimized product structure and improved profitability Judging from the 19-year report, the company’s profitability improved (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 of 19H1 increased significantly, of which: the gross 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.

A total of 45; gross 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.

24 units.

Cloud computing + domestic substitution opens up long-term and broad growth space. The company is one of the leading domestic ICT application solution providers and one of the leaders in enterprise network equipment. Its actual controller is the State-owned Assets Supervision and Administration Commission of Fujian Province.

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%; From 2007 to 2018, the compound growth rate of net profit attributable to mothers reached 22.


1) The company’s domestic alternative products have begun to be distributed a few years ago. In June 19, it was changed to a purely domestic equity holding company, United Godson, Huawei Kunpeng, Zhaoxin, North Volkswagen, Winning Bid Software, Tongxin Software and other Chinese “cores”.And “OS soul”, continue to lead the market to launch domestically produced cloud desktop products, and have successively completed product compatibility and mutual certification. Desktop cloud localization has been replaced early, with full coverage from the front end to alternative products, and the market share is leading. It is expected to fully benefit in the future.Domestic substitution.

2) Cloud computing has benefited from the strong growth of Internet and operator giants represented by Ali / China Mobile. The company, as its core supplier, has benefited significantly and has ample room for growth.

3) The company’s high share wins the bid for China Mobile’s high-end switches, which is a gradual winning of the operator’s high-end market. It tries to change the market’s inherent perception of the company’s mid- and low-end image, and moves from the mid-to-low end to the high-end market, opening up the company’s growing space in the future.That boosts company estimates.

Profit forecast and investment advice: The company is one of the leaders in enterprise network equipment. The cloud computing track in which it is located has a high ceiling. Xinchuang cloud desktop business will also usher in development opportunities. The long-term business outlook and growth logic will remain unchanged.The cloud computing + letter creation target with strong ICT competitiveness at the management end is optimistic about the company’s mid- and long-term investment value.

Due to non-recurring income and other factors that caused the 19-year performance forecast to exceed expectations, we adjusted the company’s net profit attributable to the mother for 2019-2021.

2 billion, 8.1.5 billion and 10.

64 ppm (original value 7).

3 billion, 9.

300 million and 11.

500 million), corresponding to 25 times PE in 2020, maintain the “Buy” rating.

Risk warning: trade war leads to decline in export product sales, new business expansion is less than expected and other risks