Fujian Star-Net Communication Co. Ltd.

Hi,

Thankyou for setting up this subforum.

As promised, the stocks mentioned is Fujian Star-net communication. Stock quote (002396). The approximate stats was already introduced in the other thread. As I am busy and will be busy for the next two days, just let me give a brief  intro of this company and I'll come back later to elaborate on it. It is in the business of enterprise WLAN, enterprises switches, routers, gates, big data centre networking hardwares and softwares.

Because of the coming age of 5G, AI, cloud computing, IoT etc...this is an area with explosive business opportunity especially in China which this company looks ready to capture. It is almost a given as Chinese gov is determined to be technology self -sufficient and even to supercede USA in certain areas.

Ok. For now, I only have time to share these. Please feel free to look into the company and add your opinion.

Will be keen to hear from you all if you have ever seen cases that organic growth is 30% for several years buy the share price did nothing or even decline. Is it possible?

Fujian Star-net Communication Co Ltd
Follow
SHE: 002396
17.80 CNY +0.37 (2.12%)
27 Nov, 3:19 pm GMT+8 · Disclaimer
Open 17.86
High 17.97
Low 17.65
Mkt cap 10.38B
P/E ratio 17.20
Div yield 0.84%
Prev close 17.43
52-wk high 25.55
52-wk low 14.10

The 5 year chart of the share price is horizontal most of the time and around $20.

This was what I posted in another thread which will be closed soon. I transfer it here.

==
Hello mates,

It is my first post in this forum and greeting to everybody.

I found a real company with the following attributes and welcome comments and knowledge that you have in value investing.

This company I find is in the high tech, high growth sector. Share price action isn't stellar as the general chinese stock market is still in a prolonged bear market. Long story short, let me provides some stats of this company. It has a PE ratio of 17 despite having organic growth of 30% for the past three years and is projected to be so in the next few years. The growth rate of more than 30% for the next few years is highly possible as it is in a sector set to explode no matter what happens to the Chinese economy. It is set to enjoy the benefits of state dictated shift from using foreign high technology (such as from USA) to using own high tech products produced by pure chinese companies. It has three other main competitors in China with one of them a USA company, one a partial joint venture with USA company. Only one other company is a pure bred chinese company besides itself.

Despite being just a relative small company with a CNY 10 billions capitalisation, it is spending CNY 1 billion on R&D. Thus, you can be very certain with the competitiveness of its products. I have studied the detailed technical specifications of one of its main product to similar product by his main competitor ( a very famous chinese high tech giant comparable to Apple) I mentioned above and I am certain of its superiority. This is confirmed by the fact that it is winning greater market share in the last 2-3 years with this year which seem like an "explode year" winning huge contract auctions with major companies such as China Mobile, Alibaba and many others...

The company is also making progress and breakthrough into international market. The financial statement is stellar with no debt and the company appear highly well run as feedback from customers ascertain tip-top before and after sale service.

However, one point I want to stress as i already mentioned above, the share price isn't moving anywhere at the moment. What is your opinion?
==

Another piece of info: In China, stocks in the high tech communication sector typically have a PE of 35-40 even in this bear market.

(29-11-2018, 02:25 AM)Barefoot Wrote: Another piece of info: In China, stocks in the high tech communication sector typically have a PE of 35-40 even in this bear market.

Who are their competitors in similar/close similar products/service , so that we can do a comparison on the financial ratios ?

In the area of ethernet switches, routers and other networking equipments and softwares. In China, in order of market share
1. Huawei (50% market shares?) - This is the main competitor longer term as it is a pure chinese owned company
2. H3C, 49% joint venture with HP (20+% market shares) - The market share of this company is likely to decrease as it is still 49% held by US company.
3. Cisco (10% market share) - It is a forgone conclusion that Cisco will be squeezed out from this market as not only its price is much higher, it is a pure US company. Even in international market, Huawei is slowly eating into its market share.
4. Fujian Star-net (8.5% market shares as of 2018) - Its market share has been gradually increasing in the last few years. Starting last year, it has made progress into Operators data centres winning huge contracts positioning it to be in direct competition with Huawei.
==

The above is only comparing one of its line of product. Starnet is No.1 in Asia and China, third in the world in its thin client line and it controls 45% of this market in China.
==
Other companies not in direct competition but in the same sector of communication are
1 烽火通信 Fiberhome Telecom Tech
2。 ZTE
3。深信服 Sangfor Technologies (IT， in the area of cyber network securities such as firewall etc.. which starnet is also in).

In general PE ratio in high tech sectors profitable companies are at least 35-40 which is considered unexpensive.

It just won (this month) a 100% allocation contract to provide networking equipments (switches, routers, gateway etc..) for two China Mobile's new generation state of the art data centres located in inner Mongolia. Number of servers involved is 50,000. This is considered a breakthrough as operators big data centres business were mostly dominated by Huawei, H3C, ZTE in the past.

(29-11-2018, 08:29 PM)Barefoot Wrote: It just won (this month) a 100% allocation contract to provide networking equipments (switches, routers, gateway etc..) for two China Mobile's new generation state of the art data centres located in inner Mongolia. Number of servers involved is 50,000. This is considered a breakthrough as operators big data centres business were mostly dominated by Huawei, H3C, ZTE in the past.

Looks good !

(29-11-2018, 08:42 PM)Stocker Wrote:

(29-11-2018, 08:29 PM)Barefoot Wrote: It just won (this month) a 100% allocation contract to provide networking equipments (switches, routers, gateway etc..) for two China Mobile's new generation state of the art data centres located in inner Mongolia. Number of servers involved is 50,000. This is considered a breakthrough as operators big data centres business were mostly dominated by Huawei, H3C, ZTE in the past.

Looks good !

Just a little earlier than this, they won a 200 millions CNY contract from Alibaba's new 25G/100G data centre. It was not publicly announced but company internal congratulation note stated this a major breakthrough.