Incident: On the evening of February 7, the company issued the “Notice on Proposed Repurchase of the Company's Shares and the Company's Action Plan to “Improve Quality, Efficiency, and Heavy Return”. It plans to use the company's own funds to repurchase some RMB common stock (A shares) shares already issued by the company. The company will cancel all of the shares repurchased and reduce the registered capital. The upper limit of the share repurchase price this time is not higher than 150% of the average trading price of the company's shares in the 30 trading days before the board of directors of the company deliberated and approved the share repurchase plan resolution.

It is proposed to implement stock repurchases to effectively promote “improving quality, increasing efficiency and increasing returns”. Mr. Xiong Wei, one of the actual controllers, chairman and general manager of the company, proposed that the company buy back some RMB common stock (A shares) shares already issued by the company to protect the company's value and shareholders' rights and interests, and effectively promote the “improve quality, increase efficiency and focus on return” action plan.

We believe that the company's proposed share repurchase shows the company's management's confidence in future development prospects and recognition of the company's long-term value, and is expected to effectively boost market confidence.

Adhere to the main channel of “industrial interconnection” and seize domestic development opportunities. As the leading industrial connectivity brand in China, Sanwang Communications is committed to providing digital transformation solutions based on scenario ecology for enterprises in different industries and sizes. The company has been deeply involved in industrial connectivity solutions and enabling models for many years, adhering to the “Industrial Internet+ Industry” route, launching TSN end-to-end solutions, providing customized digital solutions for various sub-fields of the industry, and seizing opportunities for transformation and upgrading of traditional domestic industries.

Accelerate product transformation and lead technology to help long-term growth. The company has increased investment in technology research and development, and the product technology system covers the four core directions of industrial Internet networks, edge computing, platforms, and security.

The company maintains leadership in next-generation communication technology such as TSN, IPv6, industrial 5G, and WiFi6. It co-led the preparation of the “TSN Solution White Paper” with the Chinese Academy of Information and Communications Technology, Zijinshan Laboratory, and Pengcheng Laboratory, and participated in the preparation of the “5G Fully Connected Factory Construction Guide”, “TSN Network Control System White Paper”, etc., actively driving technological innovation and product transformation, and its technical advantages are expected to strongly promote the company's long-term growth.

Maintain a “Highly Recommended” investment rating. Sanwang Communications is one of the few end-to-end one-stop industrial communication solutions provider in China. It is making deep efforts in the fields of smart energy, industrial Internet, smart transportation, etc., and the new HaaS solution business market is expected to expand at an accelerated pace. The company's valuation was pressured by the impact of the early market, but the company's fundamentals remained healthy, the industrial Internet industry continued to grow, and the company's valuation showed a clear cost performance ratio. The company's net profit for 2023-2025 is estimated to be 110 million yuan/147 million yuan/210 million yuan, respectively, with corresponding growth rates of 15%/34%/42%, and corresponding PE 21.6X/16.1X/11.3X, respectively, maintaining a “highly recommended” rating.

Risk warning: capital market fluctuation risk, product development risk, raw material supply fluctuation risk, risk of market expansion falling short of expectations