GONGJIN(603118) 东兴证券·2024-07-17 11:00Investment Rating - The report maintains a "Recommended" rating for the company [7][16]. Core Insights - The company, Gongjin Co., Ltd. (603118.SH), is expected to see improved performance in the second half of 2024, with revenue and gross margin showing quarter-on-quarter improvement in Q2 [9][16]. - The company reported a projected net profit attributable to shareholders of between -15 million to -18 million yuan for H1 2024, a significant decline from 2023's 202 million yuan [16]. - The decline in performance is attributed to a drop in both volume and price in the network communication market, increased domestic revenue share, and reduced gross margins compared to overseas orders [16]. - The company is focusing on expanding its overseas production capacity and customer base, which is expected to stabilize revenue from its network communication and data communication businesses [16]. Financial Performance Forecast - The company forecasts revenues of 8.33 billion yuan, 8.86 billion yuan, and 9.33 billion yuan for 2024, 2025, and 2026 respectively, with net profits projected at 217 million yuan, 274 million yuan, and 315 million yuan for the same years [21]. - The report indicates a PE ratio of 22X for 2024, 17X for 2025, and 15X for 2026, suggesting a potential for improved valuation as earnings recover [21]. Market Dynamics - The company is experiencing a stable operation across its four major business segments, with expectations for improved orders in the second half of the year [16]. - The domestic market is seeing a shift towards high-end switch demand, driven by ongoing investments in computing centers by domestic enterprises [16].