Event: The company released its 2023 three-quarter report. 23 The first three quarters achieved revenue of 7.951 billion yuan, +5.92% over the same period; net profit of the mother was 279 million yuan, -45.86% year-on-year. The gross profit margin was 38.71% (y-o-y +0.80pct), and the net profit margin was 3.51% (y-3.35pct). Looking at a single quarter, 23Q3 had quarterly revenue of 3.120 billion yuan, +4.56% year-on-year, +16.46%; net profit of 139 million yuan, -45.27% year-on-year, and +584.18% month-on-month. The gross profit margin was 37.75% (y-1.63pct, +0.84 pct month-on-month), and the net profit margin was 4.46% (y-4.06 pct, +3.7pct month-on-month).
Announced the overall plan for the AIGC Intelligence Center network. On September 13-14, Ruijie Network announced the AIGC Intelligent Computing Center Network Overall Solution at the 2023 Open Data Center Conference. The solution uses unified and standardized Ethernet network technology, and proposed a high-performance Ethernet network solution based on three-level networking and an AI-Fabric intelligent computing center network solution. The high-performance Ethernet network solution can meet 32,000 400G port access requirements through three-level networking, supporting the cluster size of 32K GPU cards. The AI-Fabric Intelligence Center network solution uses NCP+NCF as a three-level network architecture with horizontal expansion of basic modules, which can support large-scale GPU card clusters of 17K to 32K. Based on high-performance chip technology, network bandwidth utilization is improved by dividing the data stream into cells of equal length and loading it to all links; the end-to-end flow control mechanism based on VOQ+credit realizes a lossless self-loop network unrelated to business, helping to improve business computing power.
The market position remains leading. According to the Fujian Provincial State-owned Assets Administration Commission website quoting the latest report published by IDC, the company 23H1 ranked first in China's local computing IDV cloud desktop market share; China's Ethernet switch market share ranked third; China's data center switch market share ranked third; and China's wireless WLAN market share ranked third; and China's wireless WLAN market share ranked third. In the education industry, the company's switches and wireless both rank first in market share.
Promote research and development in an orderly manner. The company's R&D expenses for the first three quarters were 1,494 billion yuan, +24.53% year-on-year, and the R&D expenditure rate was 18.79% (year-on-year +2.81 pct). The sales, management, and financial expenses were 14.46% (+0.79pct), 4.79% (year-on-year +1.02pct), and 0.21% (year-on-year +0.48pct), respectively.
Profit forecasts and investment advice. We expect the company's revenue from 2023 to 2025 to be 12.247 billion yuan, 15.504 billion yuan, and 19.680 billion yuan respectively; net profit of the mother is 387 million yuan, 607 million yuan, and 895 million yuan, respectively, corresponding to EPS of 0.68 yuan, 1.07 yuan, and 1.58 yuan, respectively. Referring to comparable companies, the 2024 PE range is 35-45 times, corresponding to the reasonable value range of 37.40-48.08 yuan, and is rated “superior to the market”.
Risk warning. Technical risk; risk of increased product competition.