Starnet Ruijie (002396): Performance Exceeds Expectations, Company Profitability Expected to Continue to Improve

Starnet Ruijie (002396): Performance Exceeds Expectations, Company Profitability Expected to Continue to Improve

Event: The company issued a 2019 interim notice, and it is estimated that the profit attributable to shareholders of the listed company in 2019 H1 will 厦门夜网 be 1.

53-1.

640,000 yuan, an annual increase of 30%?
40%.

The performance exceeded expectations, and profitability is expected to continue to improve the company’s 2019H1 performance growth exceeded expectations.

Previously, the market believed that the company’s investment income increased in the same period last year, and the revenue in the first quarter increased, and the increase in net profit after deductions increased. Therefore, it was worried about the pressure on 19H1 performance growth and there were generally expectations.

The company’s 2019H1 performance increased rapidly by 30% -40%, mainly due to the company’s stable operation in the first half of the year, and continued to expand the research and development of smart networks, smart clouds, smart finance, smart communications, smart things, smart entertainment, smart communities and other businesses.Investment and market expansion efforts to optimize business layout and product sales structure.

The company’s one-time investment income contribution rate in the same period last year, excluding this factor, is expected to increase the company’s net profit after deductions are higher.

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 reached 22.

9%.

We believe that reducing the company ‘s benefit from de-IOEization of network equipment and import substitution, and the logic is still continuing and deepening; gradually, the company ‘s products and solutions promote new directions in network cloudification, SDN, and edge computing, and gradually enterHarvest time.

Starnet Ruijie has always been a leading domestic SDN manufacturer. In 2011, it began to invest in research and development resources for SDN technology reserve and product pre-research. In 2012, it was one of the 12 initial members of the “China SDN and Open Network Professional Committee”.SDN solutions covering campuses, data centers and wide area networks have been formed based on scenarios and services.

The company’s technology and product competitiveness in the SDN field is internally the first echelon, and switches, gateways, and security products at the end of the network have also formed excessive word-of-mouth expansion among operators. We believe that Starnet Ruijie willThe direct beneficiaries of network cloudification / edge computing are optimistic about the company’s long-term development.

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.

The company’s various business lines have a good growth trend, while exploring new markets, the business structure is constantly optimized, and the profitability is promoted to continue to improve.

It is expected that the company’s net profit for 2019-2021 will be 6.

92 billion, 8.

02 billion and 9.

12 ‰, corresponding to 17 times PE in 19 years, repeat the “overweight” rating.

Risk Warning: New Business Expansion Is Less Than Expected