Deeply involved in the field of industrial communication, combining software and hardware to build a platform-based enterprise. Sanwang Communications was founded in 2001 and has been deeply involved in the industrial market for more than 20 years. Facing the digital, networked and intelligent infrastructure needs of the industrial economy, the company has always adhered to the R&D-driven development concept and is committed to the R&D, production and sales of industrial Internet communication products. Its main products include industrial Ethernet switches, embedded industrial Ethernet modules, equipment networking products, industrial wireless products, etc. At the same time, the company accelerated its transformation to a platform-based enterprise. In 2023, the company initially achieved development from a product enterprise to an end-to-end full-stack product solution enterprise, from a single communications product provider to a scenario-based software and hardware product solution provider. The company continues to expand downstream application scenarios around industrial-grade products, mainly covering the four major industries of smart energy, smart cities, smart transportation and industrial Internet, and continuously improving order development capabilities and market competitiveness.

Profitability is steadily improving, and adhering to R&D innovation helps the company develop in the long term. The company focuses on development opportunities in the field of industrial communications, seizing the stock market while increasing efforts to expand emerging markets and overseas markets; combined with policy-side countries to vigorously promote the autonomous and controlled development of the industrial Internet, demand in the downstream application terminal market is strong, and the company's revenue is steadily increasing. In 2023, the company achieved revenue of 0.439 billion yuan, a year-on-year increase of 30.9%; net profit to mother was 0.109 billion yuan, an increase of 13.77% year-on-year. In the first quarter of 2024, the company achieved revenue of 75.4961 million yuan, an increase of 5.28% year on year; net profit to mother was 15.4626 million yuan, an increase of 32.97% year on year. The company adheres to the strategy of driving the company's development through R&D and innovation, and continuously enhances the comprehensive development of its products and technology. In 2023, based on the industrial Internet architecture 3.0, the company built full-stack industrial Internet solutions, end-to-end digital system solutions, HaaS solutions, end-to-end TSN solutions, etc., to better enable the development of the industry and meet the diverse needs of customers.

Accelerate the construction of industrial Internet platforms, and promote industrial upgrading through digital transformation. As an important way for China to implement the digital transformation of industry, the industrial Internet realizes the full interconnection of people, machines, and goods through the construction of three functional systems of networks, platforms, and security. It has become an important driver for promoting the transformation and upgrading of traditional industries and achieving high-quality development. It helps enterprises collaborate internally and upstream and downstream resources in the supply chain, improve production efficiency, reduce costs and increase efficiency. According to HMS data, it is estimated that industrial Ethernet will still dominate global industrial communication networks in 2024, accounting for 71% of all newly installed nodes. With the advancement of technologies such as Industry 4.0, intelligent manufacturing, and the Internet of Things, the role of Ethernet switches in industrial automation and digital transformation is becoming more and more important. The overall size of the global industrial Ethernet switch market continues to expand. According to data from Bayesian Consulting, the global industrial Ethernet switch market size was $3.106 billion in 2023, and is expected to grow to $4.525 billion by 2026. At the same time, with continuous promotion on the policy side, the development of the industrial Internet industry is gradually moving towards a stage of rapid development, and the scale of China's industrial Internet market will continue to expand. According to data from the China Business Industry Research Institute and Sullivan, China's industrial Internet platform and solution market size is 60.13 billion yuan in 2022, and it is estimated that by 2025, the market size will reach 193.12 billion yuan.

Profit forecast and investment rating: We predict that the company's 2024-2026 revenue will be 0.577/0.752/0.97 billion yuan; net profit to mother will be 0.134/0.166/0.205 billion yuan respectively; the corresponding EPS for 2024-2026 will be 1.22/1.50/1.85 yuan, respectively, and the current stock price corresponding to PE will be 19/15/12 times, respectively. As a rising star in the domestic industrial communications field, the company will focus on building integrated solutions for industrial platforms We continue to be optimistic about the company's future performance development and maintain a “buy” rating.

Risk warning: Risk of technology research and development falling short of expectations; increased risk of market competition; risk of core technology leakage; risk of brain loss.