Both revenue and profit grew by more than 20% in 2022. The company's revenue in 2022 was 11.33 billion yuan (+23.3% year-on-year), of which the main network equipment (switches, routers, wireless WLAN) accounted for 75% of the revenue, and the compound revenue growth rate of such products in 20-22 was 31%. The share of high-margin products such as switches increased, and gross margin was +2.2 pp compared to the same period last year. Attention is paid to R&D investment, and the R&D cost rate is +2.9pp compared to that of the previous year. Guimu's net profit was 550 million yuan (+20.1% year on year), and the net interest rate was 4.9% (-0.08 pp year on year). The company's revenue in Q4 2022 was 3.82 billion yuan, and the net profit of the mother was 360 million yuan.
Market competitiveness remains at the forefront. 1) According to IDC data, the market share of the company's data center switch products increased from 8.6% in '19 to 16.8% in '22; among them, the market share of 200G/400G data center switches reached 58.4% in '22. The data center switch internet industry ranked second (market share of 33.9%), and telecom operators ranked third (market share of 18.8%). 2) Communication equipment continues to lead the medical, education and retail markets. Medical cloud desktop products remained number one in 20-22, higher education and general education switches ranked first in '22 (market share 35.4%/48.6%), wireless products in higher education ranked first in '22 (market share of 34.8%), and retail switches ranked first (market share of 38.7%). 3) The number of SMB SME market customers continues to expand. The company signed 3000/800 domestic and international market partners in '22, respectively.
The company's technical products continued to innovate during the reporting period. 1) A new generation of 400G data center core switches, supporting 576 400G wire-speed ports (number one in the industry), with a full power consumption of -25% over the same period last year. 2) The all-optical wireless starry sky solution uses a novel optoelectronic hybrid cable to connect to a Wi-Fi 6 AP, which can simultaneously achieve indoor long-distance, high-bandwidth data transmission and PoE point-to-point power supply. 3) The minimalist 3.0 all-optical network further reduces the wiring costs between the central computer room and each building.
Benefiting from the rapid development of the digital economy industry. According to data from the Institute of Information and Communications Technology, China's digital economy reached 7.1 trillion US dollars in 2021, second in the world, accounting for 39.8% of China's GDP. China's digital economy is expected to exceed 60 trillion yuan by 2025. The company mainly deals in communication equipment and is an important part of digital infrastructure. It is not only the core industry of the digital economy, but also strongly supports the digital transformation and upgrading of various industries. The development trend continues to improve. The company's downstream customers, China Mobile and China Unicom, increased their computing power network investment in '23 by 35%/19%, respectively. ChatGPT and other related AI applications are showing rapid growth in cloud network resource requirements. Switch products are the core network elements of cloud networks, and the company has always maintained close contacts with leading Internet vendors.
Risk warning: 5G development falls short of expectations; industrial digital business development falls short of expectations; industry competition intensifies.
Investment advice: As the core target of government and enterprise network communication equipment vendors, the company benefits from the high development of the digital economy and maintains profit forecasts. The company's net profit for 2023-2025 is estimated to be 74/996/1.18 billion yuan respectively, and the corresponding PE is 38/30/24X respectively, maintaining an “increase in holdings” rating.