Suzhou Centec (SH:688702) Great Wall Securities·2024-02-28 16:00Investment Rating - The report maintains a "Buy" rating for the company, expecting a price increase of over 15% relative to the industry index in the next six months [24]. Core Insights - The company has shown continuous revenue growth, with a 35.17% year-over-year increase in 2023, and a reduction in net loss by 9.1 million yuan compared to the previous year [3][15]. - The company's strong brand recognition and deepening customer relationships have contributed to expanding product applications [3]. - The company is focused on high R&D investment to enhance product richness and performance, which is expected to drive sales growth and potentially turn net profit positive in the future [3]. - The domestic Ethernet switch chip market is anticipated to grow significantly, driven by the demand for data centers and the ongoing push for domestic substitution in technology [27]. Financial Summary - Revenue (in million yuan): 2021A: 459, 2022A: 768, 2023E: 1,037, 2024E: 1,426, 2025E: 1,793 [2]. - Net profit (in million yuan): 2021A: -3, 2022A: -29, 2023E: -20, 2024E: 17, 2025E: 44 [2]. - The company’s return on equity (ROE) is projected to improve from -8.1% in 2022 to 10.9% in 2025 [2]. - The company’s P/E ratio is expected to shift from -584.5 in 2022 to 389.8 in 2025, indicating a potential recovery in profitability [2]. Industry Context - The company is positioned as a leading domestic player in the Ethernet switch chip market, competing with international giants like Broadcom and Marvell [27]. - The ongoing demand for AI computing power and the national strategy for technological self-sufficiency are expected to further boost the demand for domestic Ethernet switch chips and related equipment [27].