(19-12-2018, 06:05 PM)Barefoot Wrote: The guidance for 2018 EPS is 1.2 yuan before deducting profit from extraordinary item. The EPS after deducting profit from extraordinary item is 1-1.05 yuan. From the table above, 2017 EPS before deducting profit from extraordinary item was 0.85. 2017 EPS after deducting profit from extraordinary item was 0.69. Assuming 2018 EPS is 1 yuan after deduction, the organic growth rate will be 44.9%. But if the number is at the higher end of 1.05, the growth rate will be 52.2%.
According to the company, company has not yet gained economy of scale from the sale of high end networking equipments (switches, routers etc..) to operators' data centres this year. This will be reflected as high sales and operating cost for business in this segment. However, as the volume takes off which will definitely take place next year, not only profit will scale proportionately, but increment of profit will result from the effect of economy of scale. For this year (2018), their sale of high end switches to big data centres is only at 300-400 millions. Unofficial estimates is that this number will reach 1 billion next year, a 200% increase. IDC reports that the growth of data centres in China has been and will be at a 40% annual rate until 2023. Since this company looks like it is increasing market share significantly, the growth rate for this segment of business should be significantly higher than 40% annual rate which is inline with our current estimate for this year result.
Other line of businesses such as WLAN, Virtualisation Desktop, POS etc is likely to maintain at a growth rate of 20-30%. The adoption shift in corporates from PC to virtualisation desktop has barely scratched the surface and the company is on the sweet to benefit from this wave as a leading provider in China and Asia (1st in Asia, 3rd in the world) .
Would like to see some sources for this 40% growth rate, because this gives the rate at 13% from 2016-2020, instead of 40%.
I would also like to see some reports or details about this 200% growth rate, especially how they are going to achieve this 200% growth rate. A company which already has such huge demand for its products and would have its manufacturing utilized to near 100%. Are they opening a huge new plant or plants that will triple their manufacturing output?
The company name is 星网锐捷. As far as I know, this is the only discussion of this company in English. You can find chinese companies stats in sina finance just like you can find american stocks info in yahoo finance. Here is one such location.
(19-12-2018, 06:05 PM)Barefoot Wrote: The guidance for 2018 EPS is 1.2 yuan before deducting profit from extraordinary item. The EPS after deducting profit from extraordinary item is 1-1.05 yuan. From the table above, 2017 EPS before deducting profit from extraordinary item was 0.85. 2017 EPS after deducting profit from extraordinary item was 0.69. Assuming 2018 EPS is 1 yuan after deduction, the organic growth rate will be 44.9%. But if the number is at the higher end of 1.05, the growth rate will be 52.2%.
According to the company, company has not yet gained economy of scale from the sale of high end networking equipments (switches, routers etc..) to operators' data centres this year. This will be reflected as high sales and operating cost for business in this segment. However, as the volume takes off which will definitely take place next year, not only profit will scale proportionately, but increment of profit will result from the effect of economy of scale. For this year (2018), their sale of high end switches to big data centres is only at 300-400 millions. Unofficial estimates is that this number will reach 1 billion next year, a 200% increase. IDC reports that the growth of data centres in China has been and will be at a 40% annual rate until 2023. Since this company looks like it is increasing market share significantly, the growth rate for this segment of business should be significantly higher than 40% annual rate which is inline with our current estimate for this year result.
Other line of businesses such as WLAN, Virtualisation Desktop, POS etc is likely to maintain at a growth rate of 20-30%. The adoption shift in corporates from PC to virtualisation desktop has barely scratched the surface and the company is on the sweet to benefit from this wave as a leading provider in China and Asia (1st in Asia, 3rd in the world) .
Would like to see some sources for this 40% growth rate, because this gives the rate at 13% from 2016-2020, instead of 40%.
I would also like to see some reports or details about this 200% growth rate, especially how they are going to achieve this 200% growth rate. A company which already has such huge demand for its products and would have its manufacturing utilized to near 100%. Are they opening a huge new plant or plants that will triple their manufacturing output?
This is one example of the site that claims 37.8% growth in 2017. I have seen a few articles stating that. If my memory is correct, all from chinese articles. I think the 13% growth rate is for USA market, at least that what I thought I have seen. https://zhuanlan.zhihu.com/p/33520829
19-12-2018, 09:48 PM (This post was last modified: 19-12-2018, 11:32 PM by Barefoot.)
(19-12-2018, 08:56 PM)Kaimin Wrote: I would also like to see some reports or details about this 200% growth rate, especially how they are going to achieve this 200% growth rate. A company which already has such huge demand for its products and would have its manufacturing utilized to near 100%. Are they opening a huge new plant or plants that will triple their manufacturing output?
For the 200% growth part, I have already said that it is our unofficial estimate, so no luck for a report. The estimate stems from the fact that they have recently won bidding for a few, few hundreds of millions contracts from operators like China Mobile, Alibaba etc...Adding the numbers up give us the confidence that revenue from data centres high end products sale can reach 1 billion next year. Sales from other products may still remain at 20-30% steady rate as I stated. Sorry that the company is usually very tight lips and we need to make intelligent guessing sometimes.
19-12-2018, 11:17 PM (This post was last modified: 20-12-2018, 01:53 AM by Barefoot.)
A in depth research on the current status of data centres development in China (attach). Go to page 2, paragraph 2 which states that the growth of data centre volume in 2017 was 38% over 2016 but they expect the rate to accelerate in the next 2-3 years. Go to page 5, and there is a chart on the total market size of data centre and its growth rate (yellow line). Also a take away from this research is that the current volume of data centre in China is what it was in USA in 2013. The total capacity is 20% of USA but China planned to reach USA's current capacity in 2022. That is a 400% increase in 5 years.
I will appreciate you guys to come back with your unique view about this company after you have studied the information I provided. This company is worth putting in effort to study even though most information available is in Chinese. Otherwise, it is not very fruitful for me and is quite boring.
(20-12-2018, 10:28 AM)Barefoot Wrote: I will appreciate you guys to come back with your unique view about this company after you have studied the information I provided. This company is worth putting in effort to study even though most information available is in Chinese. Otherwise, it is not very fruitful for me and is quite boring.
In a down market, not many people will be looking at stocks. In the case that they do, they are likely to first look at those that they are familiar with.
Besides, there are so many stocks. And it is literally back-breaking work to study each one.
If there is indeed value here, the market will eventually pay attention to it. Meanwhile, you can use your time to further your research -- perhaps by studying the different companies in the same/related industry of Fujian Star-Net -- or reflect on the assumptions made in your thesis.
Homepage
PR Newswire
