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共进股份(603118):紧抓AI算力发展机遇 数通业务有望蓄势腾飞

Gongjin Co., Ltd. (603118): Seize AI computing power development opportunities, the digital communication business is expected to take off

天風證券 ·  Aug 6, 2023 00:00

First, ploughing the field of communications for more than 30 years, using technology to precipitate core strength

Focus on the field of communication terminal equipment, vertical and horizontal two-way layout continues to make efforts. Common shares focus on the field of communication terminal equipment, and have entered the fields of mobile communications, sensor closed testing and automotive electronics. The products cover all kinds of access terminals, such as DSL series, PON series, AP series and switches. The second phase of the company's self-built plant in Vietnam is progressing steadily. After completion and commissioning, the company will expand its production capacity and empower its development.

The revenue drive is strong and the performance at home and abroad is outstanding. The company's revenue increased from 7.84 billion yuan in 2019 to 10.974 billion yuan in 2022, with a compound growth rate of 11.86%. Revenue from overseas operations continued to grow, reaching 5.976 billion yuan in 2022. With the continuous promotion of plant construction in Vietnam, the company's overseas business revenue may further increase, and the overall performance continues to grow strongly.

Second, the fire of artificial intelligence ignites the demand for computing power, and switches and AI servers welcome investment opportunities.

The AI model iterates rapidly and the related industries continue to benefit. The arithmetic demand of global head AI model training has doubled in 3-4 months, and the calculation power of head training model has increased by as much as 10 times every year. Under the background of the improvement of AI computing power, switches and AI servers usher in investment opportunities.

The scale of the switch market has increased, and the adoption rate of 800G switching ports has increased to meet the demand for computing power. Driven by the trend of digital transformation, bandwidth-intensive applications and new artificial intelligence workloads, the adoption rate of 800G switching ports is expected to exceed 400G data center switching ports in 2025, accounting for more than 25 per cent of port shipments, according to the Dell'OroGroup report. The evolution of switch ports to higher speeds is expected to lead to new investment opportunities.

Heterogeneous computing has become a trend, and AI servers have a broad prospect. CPU+GPU 's heterogeneous computing platform can complement each other, and more and more AI computing use heterogeneous computing to achieve performance acceleration. IDC estimates that the size of China's AI server market is expected to reach $10.9 billion by 2025. The rapid growth of AI model users, the continuous iteration of the model, and the continuous expansion of application scenarios may make the demand of AI server exceed expectations.

Third, firmly grasp the opportunity for the development of arithmetic demand and deepen the business layout to take off.

Science and technology create core competitiveness, and the product matrix of switches is constantly consolidated. The company maintains high R & D investment and has built R & D centers in many places. The company's switch business has covered data center switches, campus switches, SMB switches and so on, and business growth is worth looking forward to.

The construction of the Vietnam factory continues to advance, and the outer edge business is developed smoothly. Vietnam plant phase II project construction is progressing steadily, the company's existing production capacity has exceeded 30 billion, with a total of 90 SMT production lines. The company has developed sensor closed testing, automotive electronics market, manufacturing capacity and product technology is expected to be further improved.

Profit forecast and investment advice: the company continues to lay out its switch business and pays close attention to the development opportunities of the industry. it is estimated that the company's 23-25 net profit will be RMB 690 million, corresponding to the PE valuation of 17-13-10, giving the "overweight" rating for the first time.

Risk tips: technology iteration is not as expected, switch demand is not as expected, AI development is not as expected, industry competition is intensified, stock trading abnormal fluctuations and other risks

The translation is provided by third-party software.


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