Fujian Star-Net Communication Co.Ltd(002396) tracking report 1: the first quarter forecast exceeded expectations and the revenue increased significantly

\u3000\u3 China Vanke Co.Ltd(000002) 396 Fujian Star-Net Communication Co.Ltd(002396) )

Event: the company released the performance forecast for the first quarter of 2022. In the first quarter, the company continued to maintain a steady growth trend, the operating revenue increased significantly year-on-year, and the net profit attributable to the shareholders of the listed company was 119 ~ 147 million yuan, with a year-on-year increase of 200 ~ 270%, exceeding the expectation.

The net profit of a single quarter returned to positive growth. The company's revenue maintained steady growth in 2021, but due to the large increase in expenses, the net profit of 21q3 ~ Q4 fell year-on-year. 22q1 forecast revenue and profit increased significantly and reversed the downward trend.

There is a strong demand for enterprise network equipment. In 2021, driven by the national "new infrastructure" strategy, the digital transformation of various industries accelerated. The company continued to launch innovative products and solutions in cloud data center, park network, SMB and other fields to help the "new infrastructure" and the digital transformation and upgrading of various industries. According to IDC data, Ruijie network, a subsidiary, ranked third in China's Ethernet switch market share in 2021; In China, the market share of enterprise WLAN ranks third, among which the shipment volume of Wi Fi 6 products ranks first. In 2021, Ruijie network achieved an operating revenue of 9.19 billion yuan, a year-on-year increase of 37%; The net profit was 475 million yuan, a year-on-year increase of 53%.

Desktop cloud business is leading in China. The company leads the industry with "desktop cloud 2.0" and has landed in operators, party and government, insurance, education, medical treatment, taxation and other industries. According to IDC data, in 2021, the market share of desktop cloud terminal VDI of its subsidiary shengteng information was the first in China, and the market share of thin client was the first in Asia Pacific and China. In 2021, shengteng information achieved a revenue of 1.47 billion yuan, a year-on-year increase of 17%; However, affected by expenses and other factors, the net profit was 56 million yuan, a year-on-year decrease of 46%.

Continue to expand Internet of things applications. In terms of smart community business, the company further expanded its leading position in the front-end smart home market. According to the data quoted in the 21st Annual Report, in the category of smart community, the market share is 11%, ranking the top three in the industry. The whole process integration of the company's solutions enables the industry to be intelligent, the self-developed IOT Internet of things platform has realized the scale landing, and the competitiveness of smart home products has been continuously enhanced. In 2021, the subsidiary smart technology achieved an operating revenue of RMB 980 million, a year-on-year increase of 4%, and a net profit of RMB 122 million, a year-on-year increase of 3%.

Upgrade to "buy" rating: we maintain the net profit forecast of 830 / 900 million yuan for 22-23 years and 960 million yuan for 24 years, corresponding to PE 14x / 13X / 12x. We are optimistic about the development opportunities brought by the digital trend of the industry to the company and the pull of the East digital West computing project on the demand for white exchange in the data center. Considering that the valuation has been adjusted to the low level, we raise it to "buy" rating.

Risk tips: trade friction affects overseas business, data center products have a negative impact on gross profit margin, and the weakening of growth leads to the downward movement of long-term valuation center.

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