Core Viewpoint - The company received an inquiry letter from the Shanghai Stock Exchange regarding its 2024 annual report, prompting a thorough review of its financial performance and product sales, particularly focusing on revenue declines in key product categories and the reasons behind the high gross margin of software products [1][2]. Revenue and Profit Analysis - Revenue from transmission equipment and broadband network equipment decreased by 17.54% and 41.13% respectively, with gross margins dropping by 9.07 percentage points and 5.91 percentage points [1]. - Software products generated revenue of 161 million yuan with a gross margin of 93.31%, while other products accounted for 353 million yuan in revenue, with an increase in gross margin by 11.76 percentage points [1]. - The company achieved overseas revenue of 201 million yuan, a year-on-year increase of 14.29%, representing nearly 15% of total revenue, with a gross margin of 51.17%, significantly higher than the domestic margin of 37.82% [1][2]. Product Composition and Sales - The composition of other products is diverse, including specialized networks, digital science products, and cloud network products, making it difficult to categorize them into specific product types [2][3]. - The software products' high gross margin is attributed to their collaborative sales with main hardware products, enhancing overall profitability [5][18]. - The company has identified a strategic focus on developing new generation transmission and digital communication products, which are expected to contribute to future revenue growth [10][12]. Customer Base and Market Dynamics - The company has established long-term relationships with major domestic telecom operators, which have been recognized as strategic partners [12][13]. - The domestic telecom market is experiencing a slowdown, leading to a decline in revenue from domestic operators, while the enterprise market has shown significant growth [10][12]. - The overseas market is becoming a core driver for future performance, with the company actively expanding its international presence and optimizing its product structure [10][17]. Inventory and Supply Chain Management - The company reported a year-end inventory value of 665 million yuan, accounting for 24.81% of total assets, with a significant portion allocated to raw materials [18][20]. - The strategic reserve of core components, particularly chips, is a response to global supply chain challenges and price increases, ensuring timely order fulfillment [21][22]. - The company maintains a diverse inventory to support its customized product offerings and after-sales service requirements, aligning with industry practices [21][22].

Core Viewpoint - The company is focusing on enhancing its product offerings and expanding its market presence, particularly in overseas markets, while facing challenges in domestic revenue due to increased competition and market saturation [1][8]. Revenue and Profit - The company's total revenue for 2023 was approximately 35.31 billion CNY, with a gross profit margin of 25.54% [1]. - The revenue from software products is expected to maintain a high gross margin due to low production costs associated with embedded software [3][4]. - The company has seen a decline in domestic revenue, attributed to market saturation and price competition, while overseas revenue has shown growth [7][8]. Inventory - The company's inventory at the end of the reporting period was valued at 665 million CNY, accounting for 24.81% of total assets, with a significant portion in raw materials [16]. - The company maintains a safety stock to meet urgent customer demands and adjusts inventory levels based on sales forecasts and market conditions [18]. Research and Development Expenses - The company invests heavily in R&D, particularly in new generation transmission and data communication products, to enhance competitiveness and address market needs [7][8]. Accounts Receivable - The company has a structured approach to managing accounts receivable, ensuring timely collections and maintaining healthy cash flow [9][10]. Product Composition - The company categorizes its products into four main types: transmission equipment, broadband network equipment, software products, and others, with a focus on enhancing product functionality and market adaptability [1][2]. Client Relationships - The company has established long-term relationships with major telecom operators, which enhances customer loyalty and stability in revenue streams [11][12]. - The company has been recognized for its product quality and service, receiving various awards from major clients [11][12]. Market Strategy - The company is shifting its strategy to focus on high-margin products and expanding its international market presence, particularly in regions with less competition [8][14]. - The company aims to leverage its established brand and service capabilities to enhance its competitive position in overseas markets [15].