Steady growth of 1H22 revenue and profit

Starnet Ruijie released its semi-annual report of 2022 on August 25, and 1H22 had revenue of 6.7 billion yuan (YOY:

The net profit of returning to the mother is 310 million yuan (YOY: 25.4%). The net profit deducted from non-return is 290 million yuan (YOY: 40.3%). 2Q achieved revenue of 3.745 billion yuan (YOY: 11.22%) and net profit of 194 million yuan (YOY:-7.17%) in a single quarter. The decline was mainly due to the company's increased investment in research and development to improve product performance. In the first half of the year, against the background of repeated domestic epidemics, the company achieved steady growth in revenue and profit, benefiting from the exchange gains brought about by the appreciation of the US dollar, the company's net interest rate rose steadily from 6.65% of 1H21 to 6.93% of 1H22. We maintain the company's 2022-2024 net profit forecast of 7.64 hundred and ninety-three hundred thousand dollars, which is comparable to the company's 22-year Wind consensus forecast PE of 24.76x. Taking into account the white box trend, the industry profitability may fluctuate, give the company 22-year 22xPE, corresponding to the target price of 28.82 yuan (previous value: 29.28 yuan), maintain the "overweight" rating.

The business share of network equipment remains in the lead; from the perspective of rapid growth of revenue from communications products, 1H22 enterprise-level network equipment achieved 4.066 billion yuan in revenue, an increase of 25.25% over the same period last year, mainly driven by white box and localization of Xinchuang, Ruijie network market share gradually increased. Ruijie Network, a subsidiary of 1H22, achieved revenue of 4.522 billion, an increase of 34.18% over the same period last year, and a net profit of 260 million yuan, an increase of 16.71% over the same period last year. According to IDC,1Q22 Ruijie Network in the domestic education / Internet / service industry enterprise WLAN market share first, in the domestic manufacturing / Internet / government industry data center switch market growth first. Revenue from 1H22 communications products increased by 59.49% to 1.189 billion yuan compared with the same period last year, mainly due to the acceleration of double gigabit network construction by operators; revenue from 1H22 network terminals fell 29.85% to 353 million yuan from the same period last year, mainly due to repeated epidemics in the first half of the year, and customer demand or bidding in some industries was delayed.

The comprehensive gross profit margin has increased steadily and the investment in R & D has been increased.

1H22's comprehensive gross profit margin is 33.9%, which is higher than the same period last year. We believe that the company's continued breakthrough in the high-end operator market has led to optimization of the shipping structure and relief of the shortage of upstream raw materials supply. In terms of expenses, the sales expense rate / R & D expense rate / management expense rate of 1H22 is 11.9%, 13.8% and 4.0% respectively, in which the sales rate decreases 1.4pct compared with the same period last year, while the R & D expense rate / management expense rate increases 1.5/0.4pct respectively. In addition, the company's 1H22 financial expenses are-32 million yuan, mainly benefiting from the exchange gains resulting from the rise in the exchange rate of the US dollar against the RMB.

Maintain the "overweight" rating

We believe that as a leading manufacturer in the field of cloud infrastructure in China, the company is expected to continue to benefit from the development of the domestic cloud computing industry and the development process of Xinchuang industry. We maintain the company's 2022-2024 net profit forecast of 7.64 million, 933, 000, 200, 000, 000, 200, 000, 200, 200, 200, 200, 200, 200, 200, 200, 200, 200, 200, 100, 000, 200, 100, 200, 100, 000, 100, 000, 100, 000, 100, 000, 100, 000, 100, 000, 000, 200, 000, 200, 000, 200, 000, 200, 000, 200, 200, 000, 200, 200, 200, 200, 200, 200

Risk hint: the epidemic situation is repeated; the demand of data center is lower than expected; the demand of Xinchuang is lower than expected.