锐捷网络(301165) - 2024 Q2 - 季度财报

Important Notice, Table of Contents, and Definitions Important Notice The company's board of directors, supervisory board, and senior management ensure the truthfulness, accuracy, and completeness of this semi-annual report and assume legal responsibility, with no profit distribution planned - Company management guarantees the report's truthfulness, accuracy, and completeness, assuming corresponding legal responsibilities[2] - The company plans no cash dividends, bonus shares, or capital reserve conversions for the 2024 semi-annual period[2] Table of Contents The report comprises ten main chapters covering company overview, financial data, management discussion, corporate governance, social responsibility, significant matters, shareholder information, and financial statements Definitions This section defines key terms used in the report, including company-related entities, business terms, and technical terms, providing a foundation for understanding the content - The controlling shareholder is Fujian Star-net Ruijie Communications Co., Ltd. (002396), with the actual controller being Fujian Provincial State-owned Assets Supervision and Administration Commission[5] - The reporting period is defined as January 1 to June 30, 2024[5] Company Profile and Key Financial Indicators Company Profile Ruijie Networks Co., Ltd. (stock code: 301165) is a company listed on the Shenzhen Stock Exchange, with Huang Yihao as its legal representative Company Basic Information | Item | Content | | :--- | :--- | | Stock Abbreviation | Ruijie Networks | | Stock Code | 301165 | | Listing Exchange | Shenzhen Stock Exchange | | Full Company Name | Ruijie Networks Co., Ltd. | | Legal Representative | Huang Yihao | Key Accounting Data and Financial Indicators During the reporting period, the company achieved operating revenue of CNY 5.04 billion, up 4.40% year-on-year, and net profit attributable to parent company of CNY 153.78 million, up 10.08%, but net cash flow from operating activities significantly decreased by 309.38% to negative CNY 1.22 billion, indicating substantial cash flow pressure Key Financial Data | Indicator | Current Period | Prior Period | Year-on-Year Change | | :--- | :--- | :--- | :--- | | Operating Revenue (CNY) | 5,043,464,014.32 | 4,830,788,163.50 | 4.40% | | Net Profit Attributable to Shareholders (CNY) | 153,783,354.79 | 139,705,271.09 | 10.08% | | Net Profit Attributable to Parent (Excl. Non-recurring) (CNY) | 125,299,223.38 | 118,720,623.65 | 5.54% | | Net Cash Flow from Operating Activities (CNY) | -1,222,401,946.44 | -298,600,237.38 | -309.38% | | Basic EPS (CNY/share) | 0.2707 | 0.2459 | 10.09% | | Weighted Average ROE | 3.52% | 3.25% | 0.27% | | Total Assets (CNY) | 8,808,159,755.50 | 8,364,287,596.27 | 5.31% (vs. prior year-end) | | Net Assets Attributable to Shareholders (CNY) | 4,129,492,871.86 | 4,284,766,487.37 | -3.62% (vs. prior year-end) | Non-recurring Gains and Losses and Amounts Non-recurring gains and losses totaled CNY 28.48 million, primarily from government grants (excluding VAT refunds), asset disposal gains, and compensation, with government grants being the largest component Non-recurring Gains and Losses | Item | Amount (CNY) | Explanation | | :--- | :--- | :--- | | Gains/Losses on Disposal of Non-current Assets | 6,212,106.24 | Primarily gains from disposal of right-of-use assets | | Government Grants Recognized in Current P&L | 14,171,391.93 | Primarily government grants received other than software VAT refunds | | Other Non-operating Income/Expenses | 7,912,570.53 | Primarily compensation and liquidated damages received | | Other Items Meeting Definition of Non-recurring G&L | 3,680,447.59 | Primarily personal income tax handling fee refunds received | | Impact of Hyperinflation | 1,338,577.58 | Primarily impact from hyperinflation in Turkish subsidiary | | Total | 28,484,131.41 | - | Management Discussion and Analysis Main Business Activities During the Reporting Period The company primarily engages in network equipment, security products, and cloud desktop solutions, maintaining steady operations with a 4.40% revenue growth and 10.08% net profit growth, while innovating in data center and campus networks and expanding into new markets - The company's main business involves R&D, design, and sales of network equipment (switches, routers, wireless), network security products, and cloud desktop solutions[17] - During the reporting period, capitalizing on the AI trend, the company achieved operating revenue of CNY 5.04 billion (a 4.40% year-on-year increase) and net profit attributable to the parent company of CNY 153.78 million (a 10.08% year-on-year increase)[19] - In the data center sector, the company launched AILB load balancing solutions and released self-developed 400G/800G high-speed optical modules based on LPO technology, promoting green development of data center networks[20][21] - According to IDC data, in Q1 2024, the company ranked third in both China's Ethernet switch and data center switch markets, and second in the enterprise WLAN market (first in Wi-Fi 6 product shipments)[23] Operating Revenue and Gross Margin by Product | Product Name | Current Period Operating Revenue (CNY) | Gross Margin | Prior Period Operating Revenue (CNY) | Gross Margin | | :--- | :--- | :--- | :--- | :--- | | Data Center Switches | 1,684,969,500.02 | 27.64% | 1,040,218,094.64 | 33.52% | - Demand for data center switch products grew rapidly, but gross margin declined due to customer cost reduction pressures[28] Core Competitiveness Analysis The company's core strengths include strong R&D, deep industry experience, extensive customer resources, a broad sales network, efficient service, and a stable equity structure with employee incentives - R&D Capability: Operates eight R&D centers, with R&D personnel accounting for approximately 50% of staff, and R&D investment representing 18.76% of revenue in H1 2024[29] - Customer Resources: Serves over 300 internet companies, 1,000+ financial institutions, 5,000+ hospitals, and 2,600+ universities[30] - Sales Network: Boasts over 20,000 partners, with operations spanning more than 90 countries and regions globally[31] - Equity and Incentives: Employee stock ownership platforms hold a significant 43.12% stake, enhancing core team stability and motivation[33] Main Business Analysis Administrative expenses increased by 19.21% due to higher personnel costs, while financial expenses decreased by 166.06% due to exchange gains and interest income; operating cash flow significantly declined by 309.38% due to increased inventory purchases, and international revenue grew by 58.10% with improved gross margin Key Financial Items and Changes | Financial Item | Current Period (CNY) | Prior Period (CNY) | Year-on-Year Change | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Administrative Expenses | 279,218,073.32 | 234,226,081.45 | 19.21% | Primarily due to increased personnel costs | | Financial Expenses | -10,151,523.65 | 15,366,989.89 | -166.06% | Primarily due to increased exchange gains and interest income | | Net Cash Flow from Operating Activities | -1,222,401,946.44 | -298,600,237.38 | -309.38% | Primarily due to increased inventory purchases and material payments in the current period | | Net Cash Flow from Investing Activities | -444,289,941.62 | -108,016,993.31 | -311.31% | Primarily due to increased R&D project development expenditures and time deposits | | Net Cash Flow from Financing Activities | 881,555,741.76 | -843,998,189.47 | 204.45% | Primarily due to increased short-term bank borrowings and reduced repayments | Operating Performance by Category | Category | Operating Revenue (CNY) | Operating Cost (CNY) | Gross Margin | Revenue YoY Change | Cost YoY Change | Gross Margin YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Network Equipment | 3,984,828,412.44 | 2,498,836,705.77 | 37.29% | +8.98% | +18.57% | -5.07% | | Domestic | 4,272,006,231.30 | 2,792,510,540.17 | 34.63% | -1.63% | +6.91% | -5.22% | | International | 771,457,783.02 | 436,465,108.09 | 43.42% | +58.10% | +36.91% | +8.76% | Non-Core Business Analysis Non-core operations significantly impacted profit, with other income reaching CNY 148 million (190.10% of total profit) primarily from sustainable software VAT refunds and government grants, while asset and credit impairment losses negatively affected profitability Impact of Non-Core Business on Profit | Item | Amount (CNY) | % of Total Profit | Reason for Formation | | :--- | :--- | :--- | :--- | | Other Income | 148,010,775.06 | 190.10% | Primarily software VAT refunds and other government grants received | | Asset Impairment | -32,430,848.64 | -41.65% | Primarily due to provision for inventory obsolescence | | Non-operating Income | 12,901,398.45 | 16.57% | Primarily compensation and liquidated damages received | | Credit Impairment Losses | -7,098,828.06 | -9.12% | Primarily due to provision for bad debts | Asset and Liability Status Analysis Total assets increased by 5.31% to CNY 8.81 billion, with higher proportions of inventories and accounts receivable, and a decrease in cash; short-term borrowings significantly increased from 8.27% to 19.90% of total assets, indicating increased short-term financing for operations Asset and Liability Changes | Asset/Liability Item | Period-end Amount (CNY) | % of Total Assets | Period-start Amount (CNY) | % of Total Assets | Explanation of Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Cash and Cash Equivalents | 1,729,056,165.06 | 19.63% | 2,298,269,429.80 | 27.48% | Primarily due to increased raw material purchases, higher material payments, and dividend payments | | Accounts Receivable | 1,673,132,501.25 | 19.00% | 1,302,044,902.70 | 15.57% | - | | Inventories | 3,301,182,023.04 | 37.48% | 2,874,502,193.63 | 34.37% | - | | Short-term Borrowings | 1,752,495,723.46 | 19.90% | 692,043,055.26 | 8.27% | Primarily due to increased short-term bank borrowings | - As of the end of the reporting period, CNY 4.97 million in cash and cash equivalents was restricted due to bank guarantees, bill deposits, and litigation freezes[44] Analysis of Major Holding and Participating Companies During the reporting period, both major wholly-owned subsidiaries, Beijing Ruijie and Shanghai Ruishan, incurred losses of CNY 92.55 million and CNY 17.71 million respectively, primarily due to increased personnel costs from organizational adjustments and expanded staff Net Profit of Major Subsidiaries | Company Name | Type | Net Profit (CNY) | Explanation for Loss | | :--- | :--- | :--- | :--- | | Beijing Star-net Ruijie Network Technology Co., Ltd. | Subsidiary | -92,547,254.32 | Primarily due to increased personnel costs from organizational adjustments | | Shanghai Ruishan Network Co., Ltd. | Subsidiary | -17,710,893.88 | Primarily due to increased personnel costs from expanded staff size | Risks Faced by the Company and Countermeasures The company faces innovation, bidding, R&D failure, and chip supply risks, as the ICT industry's rapid technological changes, reliance on bidding, high R&D investment, and external chip dependency pose significant challenges to competitiveness and operations - Innovation Risk: Rapid technological updates in ICT products mean that if the company's R&D direction deviates from market trends, new products may fail to meet customer demand, reducing competitiveness[52] - Bidding Risk: Many of the company's direct and channel sales customers procure through bidding, and failure to qualify or a decrease in winning bid prices will adversely affect performance[53][54] - R&D Failure Risk: New technology development involves uncertainties, and if key technologies are not breakthroughs or performance falls short of expectations, initial investments may not yield returns[55] - Risk of Insufficient Chip Supply: Core chips rely on external procurement, and unfavorable changes in international trade conditions could lead to a risk of insufficient chip supply for the company[56] Corporate Governance Shareholders' Meeting Information The company held its 2023 Annual Shareholders' Meeting on May 21, 2024, with 88.44% investor participation, and all proposals were approved - The 2023 Annual Shareholders' Meeting was held on May 21, 2024, with an investor participation rate of 88.44%[60] Profit Distribution The company plans no cash dividends, bonus shares, or capital reserve conversions for the 2024 semi-annual period - The company plans no profit distribution or capital reserve conversion for the semi-annual period[61] Environmental and Social Responsibility Significant Environmental Issues The company and its subsidiaries are not classified as key polluting entities and received no environmental administrative penalties during the reporting period - The company and its subsidiaries are not classified as key polluting entities and incurred no environmental administrative penalties during the reporting period[62][63] Social Responsibility The company actively fulfills social responsibilities through investor relations, employee rights, supply chain cooperation, green initiatives, and public welfare, including a CNY 318 million cash dividend distribution and efforts in energy conservation and charitable activities - Implemented the 2023 equity distribution, paying a cash dividend of CNY 5.60 (tax inclusive) per 10 shares to all shareholders, totaling CNY 318 million[64] - Adopts low-carbon and energy-saving technologies in product design and production to reduce power consumption and carbon emissions[64] - Engages in public welfare activities such as student aid, poverty alleviation, and disaster relief through the Beijing Ruijie Public Welfare Foundation[64] Significant Matters Significant Related Party Transactions The company engaged in various daily related party transactions, primarily purchasing raw materials and services from controlling shareholder-controlled entities, totaling CNY 314 million within approved limits and at fair market value Related Party Transactions | Related Party | Related Party Transaction Type | Amount Incurred This Period (CNY 10,000) | Approved Limit (CNY 10,000) | | :--- | :--- | :--- | :--- | | Fujian Star-net Chuangzhi Technology Co., Ltd. | Purchase of Raw Materials, Goods | 18,617.93 | 40,500 | | Fujian Star-net Ruijie Communications Co., Ltd. | Acceptance of Labor, Services | 3,501.71 | 8,000 | | Fujian Star-net Ruijie Communications Co., Ltd. | Acceptance of Utilities and Property Services | 1,532.94 | 4,000 | | Fujian Star-net Ruijie Communications Co., Ltd. | Lease of Assets | 1,195.14 | 2,500 | | Fujian Star-net Chuangzhi Technology Co., Ltd. | Sale of Raw Materials, Goods | 5,046.85 | 10,820 | - During the reporting period, the company's total daily related party transactions amounted to CNY 314 million, not exceeding the annual estimated total limit of CNY 813 million[72] Share Capital Changes and Shareholder Information Share Capital Changes The company's total share capital remained unchanged at 568,181,818 shares, with 88.00% restricted and 12.00% unrestricted shares Share Capital Structure | Share Type | Number of Shares | Proportion | | :--- | :--- | :--- | | Total Share Capital | 568,181,818 | 100.00% | | Restricted Shares | 500,000,000 | 88.00% | | Unrestricted Shares | 68,181,818 | 12.00% | Shareholder Numbers and Shareholding As of the reporting period end, the company had 20,742 common shareholders, with Fujian Star-net Ruijie Communications Co., Ltd. and Xiamen Ruijin Dongfang Enterprise Management Consulting Partnership (Limited Partnership) as the top two shareholders, holding 44.88% and 43.12% respectively, acting in concert - As of the end of the reporting period, the total number of common shareholders was 20,742[82] Top Two Shareholders | Shareholder Name | Nature | Shareholding Proportion | Number of Shares Held | | :--- | :--- | :--- | :--- | | Fujian Star-net Ruijie Communications Co., Ltd. | State-owned Legal Person | 44.88% | 255,000,000 | | Xiamen Ruijin Dongfang Enterprise Management Consulting Partnership (Limited Partnership) | Domestic Non-state-owned Legal Person | 43.12% | 245,000,000 | - Controlling shareholder Fujian Star-net Ruijie and shareholder Xiamen Ruijin Dongfang, holding over 5%, are parties acting in concert[84] Preferred Share Information Preferred Shares The company had no preferred shares during the reporting period - The company had no preferred shares during the reporting period[93] Bond Information Bonds The company had no bond-related information during the reporting period - The company had no bond-related information during the reporting period[94] Financial Report Audit Report The company's 2024 semi-annual financial report is unaudited - The company's semi-annual financial report is unaudited[95] Financial Statements Financial statements show total assets of CNY 8.81 billion and total liabilities of CNY 4.68 billion; operating revenue was CNY 5.04 billion, net profit CNY 153.78 million, with net cash outflows from operating and investing activities, offset by financing inflows, resulting in a net decrease in cash and cash equivalents of CNY 787.17 million Consolidated Balance Sheet As of June 30, 2024, total assets were CNY 8.81 billion, total liabilities CNY 4.68 billion, and equity attributable to parent company CNY 4.13 billion, with significant increases in inventories and short-term borrowings, and decreases in cash and cash equivalents and notes payable compared to the beginning of the period Consolidated Balance Sheet Summary | Major Item | Period-end Balance (CNY) | Period-start Balance (CNY) | | :--- | :--- | :--- | | Total Assets | 8,808,159,755.50 | 8,364,287,596.27 | | Cash and Cash Equivalents | 1,729,056,165.06 | 2,298,269,429.80 | | Inventories | 3,301,182,023.04 | 2,874,502,193.63 | | Total Liabilities | 4,678,666,883.64 | 4,079,521,108.90 | | Short-term Borrowings | 1,752,495,723.46 | 692,043,055.26 | | Total Owners' Equity | 4,129,492,871.86 | 4,284,766,487.37 | Consolidated Income Statement In H1 2024, total operating revenue reached CNY 5.04 billion, a 4.4% increase, with operating costs growing faster at 10.17%; financial expenses were negative CNY 10.15 million due to exchange gains, resulting in a net profit attributable to parent company of CNY 153.78 million, up 10.08% Consolidated Income Statement Summary | Item | H1 2024 (CNY) | H1 2023 (CNY) | | :--- | :--- | :--- | | I. Total Operating Revenue | 5,043,464,014.32 | 4,830,788,163.50 | | Operating Cost | 3,228,975,648.26 | 2,930,778,102.60 | | R&D Expenses | 805,420,507.31 | 945,198,671.03 | | Financial Expenses | -10,151,523.65 | 15,366,989.89 | | IV. Total Profit | 77,859,359.21 | 27,907,055.28 | | V. Net Profit | 153,783,354.79 | 139,705,271.09 | | Net Profit Attributable to Parent Company Shareholders | 153,783,354.79 | 139,705,271.09 | Consolidated Cash Flow Statement In H1 2024, operating activities resulted in a significant net cash outflow of CNY 1.22 billion, primarily due to increased payments for goods and services; investing activities also had a net outflow of CNY 444.29 million, while financing activities generated a net inflow of CNY 881.56 million, leading to an overall net decrease in cash and cash equivalents of CNY 787.17 million Consolidated Cash Flow Statement Summary | Item | H1 2024 (CNY) | H1 2023 (CNY) | | :--- | :--- | :--- | | Net Cash Flow from Operating Activities | -1,222,401,946.44 | -298,600,237.38 | | Cash Received from Sales of Goods and Services | 5,124,950,467.97 | 4,323,912,838.33 | | Cash Paid for Goods and Services | 4,245,793,082.72 | 2,093,913,977.19 | | Net Cash Flow from Investing Activities | -444,289,941.62 | -108,016,993.31 | | Net Cash Flow from Financing Activities | 881,555,741.76 | -843,998,189.47 | | Net Increase in Cash and Cash Equivalents | -787,168,685.99 | -1,317,900,661.34 | Notes to Consolidated Financial Statements This section details consolidated financial statement items, highlighting approximately CNY 249 million in restricted cash, significant accounts receivable and inventories at CNY 1.67 billion and CNY 3.30 billion respectively, a surge in short-term borrowings to CNY 1.75 billion, and substantial R&D investment with CNY 141 million capitalized as development expenditures