维持增持评级，下调目标价至 28.70 元。考虑国外相关禁令影响以及互联网客户毛利恢复尚需一定时间，预计公司2024-2026 年（新增2026）EPS 预测为0.87(-0.05)/1.02(-0.08)/1.18 元，给予2024 年倍PE，下调目标价至28.70 元，维持“增持”评级。Introduction to this report:
The company's semi-annual report performance achieved steady growth. Against the backdrop of innovative product models and continuous increase in core business gross profit, the company's performance growth rate is expected to exceed expectations due to rapid growth in overseas business.
Key points of investment:
Maintaining an increase in holdings rating, the target price was lowered to $28.70. Considering the impact of foreign related bans and the recovery of gross profit for Internet customers, the company's 2024-2026 EPS forecast is 0.87 (-0.05) /1.02 (-0.08) /1.18 yuan, giving 2024 times PE, lowering the target price to 28.70 yuan to maintain the “gain” rating.
The company's performance achieved steady growth. From January to June 2024, the company achieved revenue of 100 million yuan, a year-on-year increase of 5.29%, and operating profit of 1.885 billion yuan, an increase of 5.13% over the previous year. At the same time, the company optimized its organizational structure, improved operational efficiency, and strengthened cost management. Expenses fell 12.99% year-on-year during the first half of the year, and net profit to mother reached 1 billion yuan. Net profit to mother declined year on year due to the major factor of the drastic reduction in government subsidies confirmed in the current period, but net profit to mother after deduction reached 0.894 billion yuan, achieving a year-on-year increase of 5.78%.
The core subsidiary Xinhua 3 achieved revenue of 26.428 billion yuan in the first half of the year, a year-on-year increase. Operating profit was 1.996 billion yuan, up 12.91% year on year, and net profit reached 100 million yuan. We believe that the company's performance is in line with expectations. With macroeconomic improvements, the future performance growth rate is expected to continue to increase as the white box switch market matures and the AI server business continues to expand.
Innovate product models and continue to lead the industry. According to the latest IDC data, in the first quarter of 2024, the company continued to lead the market share of many products. The company ranked first in the Chinese Ethernet switch, enterprise network and campus switch markets with a market share of 34.8%, 36.5%, and 41.6% respectively, and ranked second with a market share of 29.0% in China's data center switch market. As the gross profit of Internet customers in the switch sector gradually increases, and the demand for AI servers from the Internet, the government and intelligent computing centers continues to rise, the company gives full play to its core advantages in the field of computing power and connectivity, and the server and switch business advantages are expected to continue to be consolidated.
Overseas business is growing rapidly, creating a “second curve” of growth. The company's sales rights in 17 overseas regions have been liberalized one after another. Overseas sales of its own brands are impressive, and the growth rate is maintained at a high rate every year. In the first half of 2024, Xinhua 3 continued to accelerate the depth and breadth of overseas market coverage, and the scale of its own brand products and services maintained rapid growth. By deepening its global development strategy, the company has consolidated its market position in Southeast Asia, the Middle East, Japan and other regions, and continues to explore new markets in Europe, so the continuous improvement of overseas brand power has built a new engine for growth.
Risk warning: the risk of changes in the macroeconomic environment and restrictions on overseas business.
