From 1988 to 2020, revenue increased more than 3,400 times, profits increased more than 20,000 times, and the market value reached the top. This is Cisco .
In the current era of new infrastructure and technology-led development, one company is expected to replicate this business myth, and it is Ziguang shares.
side by side Huawei
The most critical thing in starting new infrastructure is to highlight the "new" and use reform and innovation to promote a new round of infrastructure construction, rather than simply returning to the old path, leading to excess waste and the phenomenon of "ghost towns".
"new infrastructure" mainly includes seven major areas: 5G infrastructure, industrial Internet , ultra-high voltage, intercity high-speed railway and intercity rail transit, new energy vehicles and charging piles, big data centers, and artificial intelligence. Among them, 5G construction and big data centers are the foundation. "5G + Industrial Internet" will promote industrial enterprises to carry out internal network and informatization transformation. It is estimated that the scale of investment in network transformation alone is expected to reach 500 billion yuan in the next five years.
As the core leader of cloud computing, Ziguang shares has huge room for growth. CITIC Securities believes that it is very likely to interpret the growth path of Cisco .
Cisco of the United States is the global leader in routers and switches. Cisco achieved revenue growth of 3,400 times in 12 years during its founding and development period, with a valuation as high as 165 times PE. After entering a mature transformation period, it became the best cash cow company in the technology industry. , and accelerate the transformation to cloud computing/data center and security. As the company matured, Cisco began to actively reward shareholders. Cisco started paying dividends in 2011, and the dividend rate gradually increased. The current dividend rate is in the 3%-4% range. As the company's dividend rate gradually increases, the dividend rate is expected to continue to increase.
Looking at Unisoc from the growth path of Cisco , we may be able to find many investment clues.
H3C is one of the few comprehensive ICT equipment manufacturers in China. It is the leader in enterprise network equipment and has a solid market position. New H3C is a subsidiary of Ziguang Co., Ltd. , accounting for 60% of its revenue. New H3C is mainly engaged in providing digital solutions and technical services. Its main products cover cloud,
. Currently, New H3C is leading the enterprise market, with the market share of switches, routers, WLAN, and firewalls in enterprise networks approaching 30%. , respectively 33.2%, 27.2%, 31.1%, and 19.3% (IDC2018). Among them, enterprise-level WLAN equipment is the company's traditional strength, with its market share ranking first for ten consecutive years. Firewall market share in 2019H1 was 23.8%, ranking first.
Huawei, as a domestic comprehensive technology leader, aims to be number one in every field. New H3C is derived from Huawei and has a close culture and gene . Generally, it can quickly reach the top three after entering a field. When Ziguang Co., Ltd. merged into H3C in 2016, H3C was still a network leader focusing on network products. After two or three years of expanding its cloud infrastructure product line, it quickly became the top three in the country in terms of servers, storage, security, and hyper-convergence. The development momentum is strong.
The technology industry has obvious winner-take-all and Matthew effects. After reviewing ten years of development, the field of cloud infrastructure has basically achieved domestic substitution. It is expected that cloud computing leaders represented by Huawei and New H3C will become the backbone of the new infrastructure in the future.
Ten years ago, domestic cloud computing basic hardware was still dominated by American technology leaders such as Cisco , Juniper, IBM, HP , Dell , and EMC. Today, ten years later, the domestic cloud infrastructure field is still dominated by Domestic substitution has been basically realized. The rise of domestic cloud infrastructure core companies such as Huawei, H3C, ZTE, Inspur, Sangfor, Sugon, and Ruijie is accompanied by this substitution process.
relies on the rise of the Chinese market, and Chinese manufacturers represented by Huawei are accelerating their global expansion. From the perspective of global share, the share of Cisco switches and routers dropped from 64.5% and 55.3% in 2010 to 49.6% and 38.8% in 2018, with major competitors such as Huawei, H3C, and Arista accelerating their rise.
strategic buying point
New H3C will officially go overseas in 2019, and its overseas own brands and own channels will officially start the global competition.In 2019, Ziguang Co., Ltd. and HP renegotiated that overseas markets will be fully open to the new H3C, and the company can use its own brands and independent channels to fully go overseas. 2019 will be the "first year of overseas expansion" for the new H3C. Taking advantage of the country's "One Belt, One Road" and other policies, the company entered 7 countries in 2019: Malaysia, Thailand, Indonesia, Pakistan, Russia, Kazakhstan, and Japan. It is expected that in 2024, the new H3C business will cover all countries except In all regions of the world except the United States, overseas markets will become the company's new growth pole.
From the perspective of investment logic, Ziguang Co., Ltd. has three major growth points: 1. Breakthrough and development of the operator market: focus on participating in 5G communication construction and seizing opportunities for network reconstruction. The domestic enterprise-level market structure is dominated by new H3C and Huawei. New H3C has gradually begun to focus on the operator market in 2018. With the development of 5G construction and network reconstruction and virtualization, the company is actively breaking into the high-end router field, relying on SDN/ NFV technology penetrates operator networks, and it is expected that New H3C's revenue from the operator market will account for 20% in the next 2-3 years;
2, overseas markets: New H3C's independent brand channel establishment and market development. Starting from 2019, H3C will develop overseas markets with its own brand, build channels, and establish overseas branches. Taking advantage of the policy opportunities of the "One Belt and One Road", strategic layout is in seven countries including Russia, Thailand, Malaysia, and Indonesia; we estimate that the proportion of new H3C's revenue from overseas markets is expected to reach 20% in the next 2-3 years;
3, network reconstruction : Seize the development opportunities in new markets such as network reconstruction, virtualization, and cloud computing. The key to network reconstruction is " decoupling ". The data center will become the basis for information communication, thus generating a large number of IT infrastructure needs; on this basis, the cloud trend makes the control layer and infrastructure layer "decoupled" , thus generating a large number of deployment requirements for IT cloud software, operating systems, etc.
In addition, under global uncertainty, the configuration value of technology leaders is increasing. Jiang Feng, general manager of Infore Capital, said that overseas markets have entered the mid-to-late stage of clearing, and the domestic economic cycle is ahead of the world. The A-share market can be cautiously optimistic in the mid-term, and the allocation value of blue-chip stocks is obvious.
Precisely because the risk-free rate of return is low, such as the ten-year government bond yield of only 2.6%, the allocation of blue-chip stocks has obvious value, because the dividend rate of these blue-chip stocks is higher than the rate of return of fixed-income products. Buying blue-chip stocks is equivalent to obtaining future growth options for these companies, which is attractive to social security and insurance funds.
From a long-term perspective, both cyclical and non-cyclical leading companies have more or less room for profit growth. Especially leading Internet companies. Our country's top Internet companies are globally competitive, and their valuations are cost-effective. These companies' horizontal layouts such as cloud computing are entering the harvest period, and overseas market adjustments have provided these leading companies with opportunities to intervene.
Ziguang Co., Ltd. belongs to this category. Under the background of global "asset shortage", it has good investment opportunities.
CITIC Securities Tsinghua Unigroup is expected to achieve global rise, become the twin leaders in domestic cloud infrastructure with Huawei, and become a technology white horse heavily invested by institutions. Using segment valuation gives a target market value of 115 billion yuan in 2020, corresponding to a target price of 56.3 yuan.
In the next 3-5 years, the company expects revenue to exceed 100 billion yuan and net profit attributable to the parent company to be 5.5 billion yuan. Considering the technical barriers of new H3C products and its leading position in the ICT field, and its close relationship with the security field (, Sangfor, and NSFOCUS Technology 2020EPE Compared with 85.9X and 54.9X), listed companies in the server industry (Inspur Information and Sugon 2020E-PE are 42.0X and 59.7X) and equipment vendor ZTE (2020E-PE is 38.2X), they have an overall valuation advantage. Minsheng Securities believes that the company has the "core asset" attributes and long-term growth characteristics of A-shares, is in the boom cycle of cloud computing industry development and 5G construction, and has an advantage in valuation. The current market value is 92.8 billion yuan, giving it a "recommended" rating.
