Core ideas:
Local Ethernet switching chip leader, providing a full range of end-to-end network chips and solutions.
Shengke Communications, formerly known as Shengke Co., Ltd., is mainly engaged in the research, design and sales of Ethernet switching chips and chip modules, switches and other supporting products, and is committed to providing a full range of end-to-end network chips and solutions. According to Zhenshi Consulting data, the company's market share of commercial Ethernet switching chips in China was 1.6% in 2020, the highest for local manufacturers. 23H1 realized revenue of 643 million yuan, YoY+82.9%.
There is a broad market space for Ethernet switching chips, and there is an urgent demand for domestic alternatives in the commercial market. Ethernet switch is the network hardware to realize the interconnection of devices in Ethernet architecture, and the switch chip is its core component. Benefiting from the strong terminal demand such as digital economy, 5G network construction, cloud computing and edge computing, Ethernet switching chips have a broad market space. According to the consulting data quoted in the company's prospectus, the market space of global Ethernet switching chips / Chinese commercial Ethernet switching chips is 36.8 billion yuan / 9 billion yuan respectively in 2020-2025, and the market space CAGR is estimated to be 3.4% 13.8% respectively in 2020-2025. China's commercial Ethernet switching chip market is growing rapidly, and the market is mainly occupied by overseas manufacturers such as Broadcom Ltd and Mei Man. There is an urgent need for the localization of the industry.
Adhere to high R & D investment and build competitive advantage, extend the layout and expand the growth boundary. R & D side: the company adheres to more than 30% of the high R & D investment, has more than 10 core technologies and nearly 400 invention patents. Product end: the company has formed a low, medium and high-end full-coverage product line layout, the research product Arctic series for the super-large-scale data center market, performance comparable to the international first-class level. Client: the company's switching chip has been used in downstream head customers Xinhua III, Ruijie network, etc., to deepen cooperation with head customers and form customer stickiness to promote the company's long-term and sound development. Fund-raising project: the company's fund-raising project includes the development of routing switching chips, constantly enriching the product line and expanding the company's growth boundary.
Profit forecast and investment advice. It is estimated that the 23-year return net profit of the company will be-50 million yuan. With reference to the comparable company valuation, the company will be given 15-17 times PS in 23 years, corresponding to a reasonable value range of 40.59-46.00 yuan per share.
Risk hint. Product development is not as expected; customer concentration is high; supplier concentration is high.