Ziguang (000938) Interim Review: Continued high R & D investment in ICT business to expand market structure

Ziguang (000938) Interim Review: Continued 返回码: 404 网站打不开?重查 high R & D investment in ICT business to expand market structure
Event: Recently, the company released the first half of 2019 report and achieved revenue of 228.74ppm, an increase of 1 per year.92%, realized net profit attributable to mother 8.4.7 billion, an annual increase of 15.51%, the net profit of non-returned mothers 5 was realized.USD 9.8 billion, an annual increase of 2.39%, in line with expectations.The products cover a wide range of fields, and the operator market is gradually opening up. It is expected that the performance in the second half of the year will continue in the first half. Investment highlights: Xinhua III’s revenue declined slightly, but its core business grew steadily: H3C revenue in the first half of 145.$ 5.2 billion, with an average of 4 per year.12%. Due to the increasing downward pressure on the economy and the company’s promotion of private label servers, revenue from agency HPE products declined; however, digital infrastructure and services for core business grew steadily with revenue of 115.$ 1.5 billion.05%; gross margin is 33.98% twice a year.43%, due to the increase in the proportion of private label server and storage revenue, will increase through high value-added services and overseas market expansion. R & D expansion to lead the market application with innovation: 2019H1 R & D investment18.2.2 billion, an increase of 15 every year.21%; continuous high R & D, technology integration and innovation, around the “4 + N” concept, covering AI network modules, WiFi 6 wireless products and 5G convergence solutions, etc. to achieve comprehensive 5G product coverage; currently, the company has comprehensively improved its productsThe intelligent application and services of the solution, and the in-depth implementation of multiple industry projects will fully benefit in the future. Focusing on 5G construction, the operator market pattern opens: 5G has entered a large-scale construction period. The company expanded the operator market in the first half of the year and launched a full range of 5G mobile backhaul bearer network products.Routers break through the operator market and achieve partial commercialization; WLAN has won the largest scale in winning bids for operators’ equipment collection projects and achieved a breakthrough in scale; SDN / NFV has in-depth cooperation with operators, etc.The company is committed to improving the operator’s product line, and its business restructuring features are prominent, with better performance in the second half of the year. Security and small base stations will become the new growth points: 1) The company takes the lead in proposing the concept of “active security”, integrates artificial intelligence, quickly builds a product system, releases a new generation of AI firewalls, and wins hardware firewall product projects with the largest share;To achieve technological breakthroughs, for the first time to release a 5G white-box indoor small base station to beat traditional equipment vendors, we believe this will become the company’s new performance growth point. Profit forecast and investment advice: It is estimated that the company will achieve net profit of 23 in 2019, 2020 and 2021.10 billion, 28.89 billion, 36.9.7 billion, the corresponding EPS is 1.13 yuan, 1.41 yuan, 1.81 yuan; corresponding to the current expected PE is 29 times, 23 times, 18 times; we maintain the company’s “Buy” rating. Risk factors: 5G construction fails to meet expectations, Sino-US trade frictions intensify, and the risk of goodwill impairment.