Shulou(Shulou.com)11/24 Report--

On August 24, Ruijie Network (stock code: 301165) disclosed its semi-annual report for 2023. As the "road builder" of digital economy, in the complex and changeable market environment, Ruijie Network focuses on the future, continuously increases investment in R & D and innovation, improves management system construction, accelerates market layout, and lays a solid foundation for long-term development. According to the semi-annual report, in the first half of 2023, the company's operating income reached RMB 4.83 billion yuan, up 6.82% from the same period last year.

Energy storage for the future, continue to increase investment in research and development

In the face of the more challenging economic and market development requirements, Ruijie Network always adheres to "long-term doctrine," practices internal skills, firmly follows the established strategic plan, and continuously tamp the innovation strength and operation efficiency of the enterprise. In the first half of 2023, R & D investment accounted for 19.57% of operating revenue, and R & D personnel accounted for 56.18%.

The company is at the forefront of the market in multiple product areas such as switches, wireless, and cloud desktops. According to IDC data statistics, in the first quarter of 2023, the Company ranked third in China's Ethernet switch market share, third in China's data center switch market share, and second in China's enterprise-level WLAN market share, among which Wi-Fi 6 product shipments ranked first. The company continuously strengthens its own technology accumulation and innovation ability, continuously realizes innovation breakthroughs in many fields, and obtains fruitful R & D and innovation achievements.

In the field of data center switches, according to IDC data, the market share of the company's data center switches continued to increase, from 8.6% in 2019 to 16.6% in the first quarter of 2023. For the construction of intelligent computing center network for next generation AI cloud services, the company released AI Fabric intelligent computing center network solution with high throughput, large bandwidth and high availability, which is applied to large data processing, machine learning and AIGC business scenarios, helping to build 10,000-card intelligent computing center network. In the field of campus network, the minimalist Ethernet all-optical solution continues to advance to the 3.0 stage, providing high-bandwidth, highly flexible and simple maintenance exclusive Gigabit/10 Gigabit network bearer services for campus services. In the field of wireless products, Star Wireless 3.0 solution was released. At the same time, Wi-Fi 7 new AP was launched, and the product won a heavy award at Interop Tokyo 2023.

In the field of cloud desktop, Sanqing 2.0 cloud desktop solution was launched to win with innovation and continue to lead. Sanqing 2.0 comprehensively improves user experience through high-performance and cost-effective GPUs, and brings brand-new operation and maintenance management efficiency through desktop layered decoupling. At the same time, the G4 series cloud terminal and all-in-one machine products were released, and the performance and design were greatly leapfrogged again.

In the field of network security, a new generation of firewall products was launched, which adopted three designs: intelligent outbound security, intelligent policy steward and intelligent cloud enabling, which can quickly detect and block in real time, helping customers to successfully get rid of attacks and threat spillover, and with stronger security protection capability.

Deepen management, improve efficiency and tamp the foundation of development

Ruijie Network understands the principle of "if you want to do well, you must first sharpen your tools." By using advanced project management tools, Ruijie Network accelerates the implementation of demand planning, takes refined management as the foothold, improves enterprise efficiency and maximizes enterprise value. The company promotes management reform from five aspects: innovation management, quality management, talent management, process improvement and overseas platform construction.

In terms of innovation management, the company has always attached great importance to the introduction, internalization and deepening of innovative methods. In 2017, the company introduced Design Thinking Workshop; in 2019, TRIZ (Theory of Inventive Problem Solving) innovative method was introduced to help product designers and engineers identify and solve problems more efficiently. In order to have a better user experience for products, the company has also introduced some tools, methods and processes for user demand and experience design, and trained a group of product planners, engineers and designers with high user experience literacy to improve the user experience design capability of the whole company, and landed on products and solutions to become the core competitiveness of the company.

In terms of talent management, the talent density will be rapidly increased around the progress of talent demand and in combination with the construction of enterprise culture. At the same time, we will continue to promote job standardization and qualification system construction, and introduce high-level management talents and professionals to lay a foundation for the company's sustainable long-term development.

In terms of process improvement, the Company has introduced IPD (Integrated Product Development) process since 2012, and continuously optimized the IPD process for many times in combination with the product characteristics and organizational structure of the Company, and established and improved the Ruijie IPD process that adapts to the current multi-business form of the Company. Ruijie IPD process emphasizes product innovation oriented to market customer needs, and makes product investment decisions and development decisions accordingly. The company divides products into concept, planning, development, verification, release, life cycle and other stages, sets multiple milestone nodes in each stage, and conducts technical review and business decision review. With the introduction of IPD process, the department's operational efficiency, product and technology innovation level and customer satisfaction have been greatly improved. IPD reform is a long-term work, and its value and effectiveness will be increasingly apparent.

Digital China Top-level Design Landing + AI Wave Drives New Blue Ocean

"In 2023, the top-level planning of" Digital China "will be implemented, and the digital economic engine will accelerate its power." In February 2023, the Overall Layout Plan for Digital China Construction issued by the Central Committee of the Communist Party of China and the State Council provided a more specific blueprint for the development of China's digital economy. The plan clearly puts forward that digital infrastructure and data resource system are the "two foundations" for digital China construction. According to IDC data, China's total digital transformation expenditure is expected to reach US $2.06 trillion from 2023 to 2026, with a compound growth rate of 19.1% from 2023 to 2026. From enterprises to industries, from industrial parks to industrial clusters, there is huge market space for digital transformation. At the same time, with the release of the generative AI large model represented by ChatGPT, the demand for AI application driver computing power has soared, and network equipment has been iteratively upgraded.

According to the analysis of Orient Securities Research News, the infrastructure represented by computing power and network has become the "hard infrastructure" supporting social development. From the perspective of national policy, the fields that can play a fundamental and pre-emptive role in the construction of digital China include two directions: the digital infrastructure industry represented by the computing network, and the data resource party, public data operator and digital technology provider in the field of data elements. Huatai Securities believes that the data industry with data as the core is expected to usher in development opportunities, specifically involving links including data bottom computing facilities, data element industry chain covering data confirmation, transaction and application, data security, etc.

In the first half of 2023, despite the tense and volatile international situation, the domestic macroeconomic recovery process slowed down, putting pressure on business development. However, driven by the vigorous development of digital economy, the ICT industry still has broad prospects. In order to meet the needs of high computing power operation, network equipment manufacturers continue to explore the application of new generation core technologies, so that network equipment can be developed in the direction of higher performance and lower energy consumption.

Guangfa Securities Research News pointed out that AIGC drives the explosive growth of computing power and the demand for high-performance network equipment increases. Ruijie Network continues to benefit from digital economic growth and AI application expansion. In terms of R & D, the Company focuses on actively exploring new generation data center network technologies such as 5G, high-performance switches, silicon optics and liquid cooling, which will further explore the high-end market.

Huatai Securities Research News pointed out that the promotion of digital China construction and the development of AIGC application will bring new volume to the demand of network equipment industry, and Ruijie Network will achieve market share increase by virtue of product innovation and channel advantages.

With the acceleration of the digital economy engine, Ruijie Network conforms to the potential of the digital economy. In the severe market situation, relying on its keen and rapid R & D and innovation strength, Ruijie Network continues to consolidate its position as the "leader of ICT and cloud computing infrastructure." Ruijie Network will continue to improve the innovation power of the enterprise, deepen management and improve efficiency, consolidate the foundation, build a solid foundation, steadily advance according to the established goals and plans, continuously improve the innovation power and operation efficiency of the enterprise, accumulate energy and seek future, and do not slack.

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