Suzhou Centec (688702)2025-02-02 12:25Investment Rating - The report maintains a "Recommended" rating for the company, indicating an expectation of stock performance that exceeds market performance by 10% to 20% within the next six months [15]. Core Views - The company is a leading domestic Ethernet switch chip manufacturer with significant potential for domestic substitution. It is increasing its investment in high-end chip research and development, which is currently putting pressure on profits [3][11]. - For the fiscal year 2024, the company anticipates revenue between 1.05 billion and 1.10 billion yuan, representing a year-on-year growth of 1.21% to 6.03%. However, it expects a net loss attributable to shareholders of between 85 million and 50 million yuan, which is an increase in losses compared to the previous year [3][8]. - The company is leveraging the current trends in domesticization and the development of the integrated circuit and network communication industries to enhance its product offerings and market position [8][11]. Summary by Sections Financial Performance - In 2023, the company reported revenue of 1.037 billion yuan, with projections of 1.078 billion yuan for 2024, 1.411 billion yuan for 2025, and 1.994 billion yuan for 2026, indicating a compound annual growth rate [7][12]. - The net profit for 2023 was a loss of 20 million yuan, with expectations of a loss of 67 million yuan in 2024, followed by a profit of 46 million yuan in 2025 and 75 million yuan in 2026 [7][12]. Product Development - The company has a comprehensive product line and is focusing on high-end products, including the Arctic series, which supports a maximum port rate of 800G and is expected to see small-scale deliveries in 2024 [8][9]. - The company is also expanding its mid-range and low-end product offerings to capitalize on the domestic market opportunities [8][11]. Market Position - The company has established itself as a key player in the domestic Ethernet switch chip market, breaking the long-standing monopoly of international giants through significant R&D investments [9][11]. - The demand for high-speed network communication devices is expected to rise due to the explosion of AI industries, which will further enhance the company's market share in the AI network sector [11].