The company's operating performance in the first quarter of 2024 was under pressure. The company's revenue for the first quarter of 2024 was 2.47 billion yuan, down 0.24% year on year; net profit to mother was 0.2 billion yuan, down 98.07% year on year; deducted non-net profit was -013 billion yuan, down 111.66% year on year. The international situation is complex and changing, and demand from related industries is insufficient, putting great pressure on the company to expand its business.
The company's investment has increased, and costs have increased. Competition in the industry has become more intense, and product prices have fluctuated. The company's gross margin for the first quarter of 2024 was 38.52%, down 3.82 pct year on year and 0.94 pct month on month.
Facing the development trend of new industries such as new AI, the company continued to expand its business scale in the past two years. The number of employees in 2021-2023 was 6483/7980/8069, respectively, and related labor management and other expenses continued to rise. Sales, management, and R&D expenses changed by +17.8/+23.8/ -4.8% year-on-year in the first quarter of 2024, respectively.
The core supplier of enterprise network equipment, continues to lead the market share. The company adheres to a keen insight into industry trends and strategies to respond quickly and flexibly to customer needs, and maintains its core competitiveness through continuous research and development of innovative value products and market expansion. According to IDC data, in 2023, the company's park switch market share ranked first in the domestic education and distribution industry; the data center switch market share ranked second in the domestic Internet industry; and the WLAN product market share ranked first in the domestic Internet, education, communications, and service industries. Last year, in the operator sector, Mobile won the bid for the 2023-2024 New Intelligent Computing Center (Intelligent Computing Phase 1) network package, ranking second in share; in the Internet market, it won the bid for Ali, Tencent, and Byte next-generation switch product development bids, delivering 200G/400G data center switches on a large scale.
The rise of AI is speeding up digital infrastructure construction, and the company is welcoming new development opportunities. The big generative AI model represented by ChatGPT was released. AI applications are driving a surge in computing power demand, and the pace of upgrading information infrastructure such as cloud, network, computing, storage, and security is accelerating. According to IDC data, the growth rate of China's switch market is expected to stabilize at 7%-8% in the next 5 years, with data center switches growing at 8-10%. The company and ByteDance jointly showcased the industry's first 51.2T data center switch supporting LPO (linear pluggable optical module) at the US OFC exhibition in March of this year; it also launched an 800G switch technology solution using a direct drive system design, and plans to achieve mass production and delivery of next-generation Marvell TH5 chip switch products to help customers become the world's first commercial manufacturer of AIGC clusters.
Risk warning: New technology research and development progress falls short of expectations; upstream raw materials are scarce; industry competition is intensifying.
Investment advice: The company is a leading supplier of enterprise network equipment and is expected to seize AI development opportunities. According to the adjusted profit forecast, the company's revenue for 2024-2026 is expected to be 131.2/153.5/17.98 billion yuan, respectively (the original forecast value was 162.1/201.7/24.51 billion yuan), net profit to mother is 4.9/6.2/760 million yuan (the original forecast value was 6.8/8.8 billion yuan), and the PE corresponding to the current stock price is 42/33/27x, respectively, maintaining the “increase in weight” rating.