Main points of investment

On Friday (November 4), Ruijie Network, a listed company on gem, made an inquiry.

Ruijie Network (301165): the company is a leading provider of ICT infrastructure and industry solutions, specializing in the R & D, design and sales of network equipment, network security products and cloud desktop solutions. From 2019 to 2021, the company achieved operating income of 5.22 billion yuan / 6.698 billion yuan / 9.189 billion yuan, YOY of 21.89%, 28.31%, 37.19%, and a compound annual growth rate of 28.98%. The net profit of homing was 392 million yuan / 297 million yuan / 458 million yuan, and the YOY was 19.65%, 24.14%, 53.94%, respectively, and the annual compound growth rate of three years was 11.79%. During the latest reporting period, 2022H1 achieved an operating income of 4.522 billion yuan, an increase of 34.19% over the same period last year, and a net profit of 261 million yuan, an increase of 17.06% over the same period last year. The company expects to achieve a net profit of 492.5733 million yuan to 525.4058 million yuan from January to September 2022, up 20.32% from a year earlier to 28.34%.

Investment highlights: 1. The company is a leading provider of enterprise network equipment products in China, with a leading market share of switches, wireless products and other hardware products, or benefit from the new infrastructure construction driven by the national "new infrastructure" strategy. The company is one of the earliest switch manufacturers in China, launching 10 Gigabit switches in 2003 and a full range of wireless products in 2008. After years of development, the company has grown into a leading provider of ICT infrastructure and industry solutions. According to IDC data, from 2019 to 2021, the company ranked third in China's Ethernet switch market share for three consecutive years, and China's enterprise WLAN market share ranked third in 2021, with Wi-Fi 6 product shipments ranking first for three consecutive years from 2019 to 2021. In 2020, the country put forward the "new infrastructure" strategy, advocating to speed up the construction of new infrastructure such as 5G network, big data center, artificial intelligence and industrial Internet, and the company is expected to benefit as one of the leading network equipment providers in the industry. 2. The company is one of the earliest manufacturers to carry out cloud desktop-related technology research and solution design in China, and is the leader of cloud desktop products in the fields of education and healthcare. It is expected to benefit from the substantial increase in cloud desktop demand brought about by the increase in mobile office demand. In 2013, the company released the industry's first cloud classroom solution, taking the lead in applying desktop virtualization technology to computer classrooms, and then taking the lead in large-scale commercial use of IDV technology and launching the industry's first dual-engine cloud desktop solution combining VDI and IDV architecture, forming a strong first-mover advantage in the field of cloud desktops. After years of development, the company has independently developed a number of key cloud desktop technologies, and the overall cloud desktop solution has been widely used in a variety of scenarios in various industries, and currently has a strong advantage in the field of education and healthcare. According to CCW statistics, the company ranked first in the market share of cloud classroom solutions in China for eight consecutive years from 2014 to 2021, and ranked first in China's medical cloud desktop market share for two consecutive years in 2020 and 2021. 3. The parent company is expected to produce good synergy in technology and business for Ruijie, which is a market-leading star network in ICT. Star net Ruijie is a leading ICT application solution provider in China, with a national enterprise technology center and the only provincial network engineering laboratory in Fujian Province. it has repeatedly undertaken and selected the National Torch Plan, the National 863 Program Project and the National Nuclear High Base Project, and has formed a large number of leading domestic and international core technologies in the field of ICT. Business covers smart network, smart cloud, smart communication, smart finance, smart entertainment, smart community and many areas. During the reporting period, Xingwang Ruijie was the only supplier of pure OEM services for the company, and while making full use of its strong OEM production capacity, the company better ensured the confidentiality of product technology; except that the subsidiary Shengteng Information partially overlaps with the company in the field of cloud desktops, other products controlled by Xingwang Ruijie do not compete with the company, and the company may better benefit from the synergy with the parent company.

Compared with listed companies in the same industry: the company's main business is the R & D, design and sales of network equipment, network security products and cloud desktop solutions, according to the similarity of the business, select Ziguang shares, ZTE Corporation, Qimingxing and Shenxin as comparable listed companies. According to the above comparable companies, the average income of the industry in 2021 is 48.338 billion yuan, PE-TTM (excluding negative numbers / arithmetic average) is 24.86X, and sales gross profit margin is 46.56%. Comparatively speaking, the company's revenue scale and gross profit margin are lower than the industry average.

Risk hint: companies that have started the inquiry process still have the possibility of not being listed due to special reasons, the company content is mainly based on prospectuses and other public materials, and the selection of listed companies in the same industry is not accurate. Risk, content data selection may have interpretation deviation, specific listed company risk is displayed in the text content, and so on.