\u3000\u3000 Quectel Wireless Solutions Co.Ltd(603236) (603236)
Abstract: the company released the performance forecast for 2021. It is estimated that the net profit attributable to the parent company will reach 350 million yuan in 2021, with a year-on-year increase of about 85.17%, deducting about 328 million yuan of non attributable net profit, with a year-on-year increase of about 92.86%.
Q4 continued its growth trend and achieved a new high performance in the whole year. The company expects that the annual revenue in 2021 will be about 11 billion yuan, with a year-on-year increase of 80.16%, maintaining a high growth trend throughout the year, and the revenue and net profit attributable to the parent company have reached a record high. Q4’s revenue is expected to be 3.524 billion yuan in a single quarter, with a year-on-year increase of 85.69%, and the net profit attributable to the parent company is expected to be 113 million yuan, with a year-on-year increase of 76.66% and a month on month increase of 9.31%. In the first half of the year, the company’s gross profit margin fell due to the rise in the price of upstream raw materials and the increase in the proportion of CAT1 module with low gross profit margin. Q3’s gross profit margin gradually rebounded with the increase of partial prices and the release of production capacity, and the company, The annual profitability is expected to improve year-on-year. The high growth of the company’s performance mainly benefited from the increase of business volume such as LTE module, lpwa module, vehicle module and 5g module. According to counterpoint data, the company ranked first with 31.6% of the global cellular Internet of things module shipments in the third quarter of 2021, a significant increase of 10.4pct compared with the second quarter. The growth was mainly driven by the growth of Nb IOT and 4gcat1 module shipments. The company pays attention to R & D investment. In the first three quarters, the R & D investment was 738 million yuan, with a year-on-year increase of 68.88%. At present, the company has set up R & D centers in Shanghai, Hefei, Foshan, Vancouver and Belgrade. By the end of 2020, there were 2366 R & D personnel, accounting for more than 78%. At present, the company has formed a one-stop solution with cellular communication module, WiFi & BT module, GNSS module, antenna, cloud platform, etc. during the reporting period, the company made breakthroughs in vehicle, intelligent security, gateway, wireless payment, notebook computer and other fields, and the revenue increased significantly.
The penetration rate of 5g module is improved, and the application of vehicle module is accelerated. GSMA predicts that the number of Internet of things connections will reach 25 billion in 2025, and the global Internet of things market capacity will increase from US $343 billion in 2019 to US $1.1 trillion, with CAGR exceeding 20%. As the core component of the IOT terminal, the communication module will fully benefit from the high boom of the IOT industry, and the demand will continue to grow. According to the counter point data, the global shipment of cellular IOT modules in the third quarter of 2021 increased by 70% year-on-year, of which 5g modules increased by 700%, and the revenue exceeded US $1.5 billion, including NB IOT and 4gcat 1. The module has increased significantly and become the mainstream of the market. Automobile is one of the main downstream applications of the module. According to the data of counterpoint, 18.91% of the revenue in the third quarter of 2020 came from the automobile field, accounting for the highest proportion. With the maturity of 5g technology and the rapid development of new information technologies such as artificial intelligence, the integration of intelligence and networking has become an important trend in the development of the automobile industry. At present, most Chinese automobile enterprises have launched L2 level models, Foreign auto companies have launched vehicles with L3 level automatic driving ability. The research and development process of L3 / L4 level intelligent vehicles is actively advancing. As a key link connecting the perception layer and network layer of the vehicle network, the market scale will increase significantly with the improvement of automatic driving penetration and the continuous promotion of the vehicle network. Due to the complex on-board application environment, 5g technology with low time delay, large bandwidth and high reliability will significantly improve vehicle driving safety. The expanded application of 5g module in the field of vehicle networking, the superposition of operators’ efforts to increase 5g network layout, the decline in price caused by the expansion of 5g module mass production scale and other factors, it is expected that the demand will maintain a high growth rate and the penetration rate will be improved.
Accelerate the layout of vehicle and 5g business and form a new growth point of performance. The company laid out the field of vehicle modules earlier. Its products include 5g, LTE, c-v2x vehicle specification module, vehicle Android intelligent module, WiFi & Bluetooth module, GNSS positioning module, vehicle antenna and other products, which are widely used in T-box, smart antenna, vehicle navigation system, networked vehicle system, aibox and other fields. At present, there are more than 35 well-known host factories in the world More than 60 mainstream Tier1 manufacturers use the company’s products to support their on-board intelligent connection, and 5g + c-v2x series modules successively support the batch delivery of a variety of models, including Chinese express Gaohe hiphicx, Great Wall Motor Company Limited(601633) Haval H6, wey brand mocha and other models. During the reporting period, the company completed the fixed increase and raised and invested 1.063 billion yuan, of which 144 million yuan was used for the industrialization project of intelligent vehicle networking, developed the next-generation vehicle specification / vehicle grade 4G, 5g and GNSS vehicle networking modules to meet the needs of customers, and expanded the production of products in the field of vehicle. In terms of 5g modules, the company currently has about 30 5g modules, supporting terminal development and commercial use by more than 1000 customers around the world. Customers can freely choose combinations according to their own needs. The company won the bid for the mobile 5g general module project in 2021, accounting for nearly 50%. In the overseas market, the terminal products of 5g modules have been widely used in FWA projects of operators in North America, Europe and Australia. During the reporting period, the company released a number of intelligent module products. With the continuous implementation of intelligent terminal innovation, the company’s products will be applied in many fields such as shared travel, smart grid and smart retail, contributing to the increase of revenue.
Investment suggestions: Quectel Wireless Solutions Co.Ltd(603236) is the global leader in cellular Internet of things modules, with a rapid increase in the overall market share. The product matrix is expanded from cellular modules to WiFi & BT modules, antennas and cloud platform services. With the scale effect of capacity expansion, the scale of revenue maintained rapid growth. Considering that the price rise of raw materials and exchange rate fluctuations throughout the year have a certain negative impact on the gross profit margin, we adjusted the net profit of the company from 2021 to 2023 to 351 million / 546 million / 808 million yuan (the original forecast value was 362 million / 546 million / 808 million yuan), and maintained the “buy” investment rating.
Risk warning: industry competition intensifies the risk; The development of Internet of things is less than expected risk; Risk of price rise of upstream chip raw materials; The public materials used in the research report may have the risk of information lag or untimely update.
