\u3000\u3000 Quectel Wireless Solutions Co.Ltd(603236) (603236)
Event: the company released the annual performance forecast for 2021. It is estimated that the net profit attributable to the shareholders of the listed company in 2021 will be 350 million yuan, with a year-on-year increase of about 85.17%. It is estimated that the operating revenue in 2021 will be about 11 billion yuan, with a year-on-year increase of about 80.16%.
Our comments are as follows:
The net profit is in line with the expectation and will continue to grow rapidly in the future
The net profit of the company in the 21st year was 350 million yuan, with a year-on-year increase of 85.17%, higher than the income growth rate, and the net interest rate was 3.18%, slightly higher than the level in 2020; In a single quarter, the net profit of 21q4 was about 113 million yuan, a year-on-year increase of about 76.66%. We believe that this is due to the fact that the company is under the pressure of rising prices of raw materials such as upstream chips on the one hand, and the scale effect is gradually emerging on the other hand.
The income slightly exceeded expectations, and the share increased significantly
The company’s revenue in 21 years was 11 billion yuan, with a year-on-year increase of 80.16%, mainly due to the continuous innovation of products and the enrichment and optimization of product structure in 2021 according to the market demand, forming a one-stop solution including cellular communication module, Wi Fi & BT module, GNSS module, antenna, cloud platform, etc, Diverse products and rich functions can meet the growing demand for intelligent terminals of the Internet of things. Compared with 2020, the company’s sales revenue in vehicle, intelligent security, gateway, wireless payment, laptop and other fields increased significantly in 2021. In a single quarter, the revenue of 21q4 was about 3.524 billion yuan, an increase of 85.69% year-on-year and 11.50% month on month, highlighting the leading competitive advantage and significantly increasing the share.
The industry scale continues to grow, the market is considerable, and the company’s share is expected to continue to increase, which can be expected in the future
The Internet of things market has considerable capacity and rapid development. According to the prediction of the mobile economy 2021 released by GSMA, the total number of global Internet of things connections will reach 24 billion in 2025. According to the prediction of Ericsson mobility report released by Ericsson in June 2021, the number of global Internet of things connections will reach 26.4 billion in 2026, including nearly 6 billion internet of things terminals for cellular communication. Abiresearch predicts that the number of global IOT terminal connections is expected to exceed 23 billion in 2026.
Looking forward to the future, the company’s share is expected to continue to increase rapidly, and the scale effect is expected to continue to appear under the trend of high income growth: 1) berginsight data shows that in 2020, the global shipment of cellular modules was 303 million, with a year-on-year increase of 14%, and the corresponding share of Quectel Wireless Solutions Co.Ltd(603236) sales revenue was 24%, maintaining a leading position in the industry, It can be seen that the revenue growth rate of Quectel Wireless Solutions Co.Ltd(603236) in recent two years is significantly higher than that of the industry; 2) The company has rich product series and strong product competitiveness. For example, China Mobile purchased 320000 5g modules this time, and Quectel Wireless Solutions Co.Ltd(603236) five 5g modules won the bid with the largest share, with a total of about 150000 modules, accounting for nearly 50%, demonstrating the leading strength of the company’s product performance / maturity; 3) The company pays attention to technology upgrading and R & D investment, while strengthening production and sales capacity. Based on the existing scale advantages, the company has certain advantages in procurement cost / stable supply chain. At the same time, it raises funds to build 20 production lines in Changzhou. By the year of reaching production capacity, it will form a production capacity with an annual output of 90 million modules. In the future, the company’s advantages in customization, rapid delivery and cost control are expected to further appear. According to the different needs of downstream customers, the company adopts the marketing mode of direct sales and distribution, and has established a global marketing and service network. The sales and technical service teams in more than 150 countries and regions around the world can provide customers with timely and efficient services.
Profit forecast and investment suggestions:
Benefiting from the rising volume and price of Internet of things modules, Quectel Wireless Solutions Co.Ltd(603236) as an industry leader, has obvious competitive advantages and will fully enjoy the industry dividend. At the same time, the company actively develops industry customers and continues to increase its share, driving the company’s continuous high growth. Considering that the company is under the pressure of rising prices of raw materials such as upstream chips on the one hand, and the scale effect is gradually emerging on the other hand, the company’s predicted net profit attributable to the parent company for 21-23 years is adjusted to be 350 million, 590 million and 900 million yuan (the original value is 368 million, 574 million and 848 million yuan), and the corresponding PE for 22 years is 46x, reiterating the “overweight” rating.
Risk tip: the sales volume of intelligent Internet connection / new energy vehicles is lower than expected; Fierce competition in the industry and the risk of price decline; The price rise of upstream chips and raw materials affects profitability; The order execution progress is lower than expected; The performance forecast is the preliminary calculation of the company, and the actual situation is subject to the annual report
