Suzhou Centec (688702)2024-11-18 14:34Investment Rating - The investment rating for the company is "Buy" (maintained) [2] Core Views - The company is expected to benefit significantly from the domestic substitution wave in high-specification switching chips, particularly with support from China Mobile, which plans to invest over 100 million yuan in developing high-specification chips [7] - Revenue forecasts for 2024-2026 have been adjusted downwards due to short-term pressure from limited high-end product deliveries, with expected revenues of 1.162 billion, 1.536 billion, and 2.088 billion yuan respectively [7] - The company's current price-to-sales ratios are projected to be 23.3, 17.7, and 13.0 times for 2024, 2025, and 2026 respectively, indicating potential long-term benefits as the domestic network product substitution progresses [7] Summary by Sections Company Overview - The company, 盛科通信 (688702.SH), has a current stock price of 66.11 yuan, with a market capitalization of 271.05 billion yuan and a circulating market value of 133.21 billion yuan [2] Market Trends - The global Ethernet switch market saw a year-on-year revenue growth of 7.6% in Q2 2024, with the data center segment experiencing a significant increase of 104.3% [8] - The Chinese Ethernet switch market also showed a year-on-year growth of 8.7% in Q2 2024, indicating a potential recovery in the non-data center switch market [8] Research and Development - The company is focusing on three main areas: expanding high-end chip products for large data centers, enriching its existing product series, and developing access-level products to strengthen its industry moat [9] - The company has achieved good progress in testing multi-core architecture products, with maximum port speeds reaching 800G and switching capacities of 12.8T and 25.6T [9] Financial Projections - The company's projected revenues for 2024, 2025, and 2026 are 1.162 billion, 1.536 billion, and 2.088 billion yuan respectively, with year-on-year growth rates of 12.0%, 32.1%, and 36.0% [11] - The gross margin is expected to be 35.9% in 2024, with a net profit margin projected at -7.5% [11]