\u3000\u3000 Shanghai Hollywave Electronic System Co.Ltd(688682) (688682)
Shanghai Hollywave Electronic System Co.Ltd(688682) is a leading solution provider of electronic measurement in China, and has a deep accumulation in electromagnetic measurement and simulation. The company’s current core focus is reflected in the following four aspects: 1) the company provides electronic measurement system for phased array antenna, which benefits from the high landscape of military industry, and actively expands to 5g / Satellite / automobile industry in more civil fields. 2) External acquisition, expanding from antenna to t / R component, and continuously expanding the boundary of measurement business; 3) Increase R & D investment and expand the advantages of “integration of simulation and testing”. The company launched industrial software electromagnetic caerdsim1 Version 0; 4) From calibration measurement system to phased array antenna products, the future accelerated iteration is expected to be large.
China’s leading enterprise in the field of electromagnetic measurement, multi-dimensional extension of application fields and products. Shanghai Hollywave Electronic System Co.Ltd(688682) focusing on the field of electromagnetic simulation and measurement for 15 years, relying on the independently developed electromagnetic analysis simulation software and phased array calibration algorithm to provide relevant solutions, the company’s products realize the full life cycle coverage of electronic products from simulation, R & D, design, verification, production and optimization. The company has strong technical strength. According to the prospectus, the company has participated in many major projects such as “Chang’e 3” and “Beidou 2” and cooperated with Zte Corporation(000063) in 5g. It is a leading enterprise in China specializing in special new fields. The company’s main businesses include: ① calibration and measurement business for phased array antenna; ② Electromagnetic simulation analysis service; ③ Phased array product business; ④ General test service. In terms of industry, according to the statistics of bisresearch, the global CAE market in 2018 was US $6.4 billion, and Chinese manufacturers accounted for less than 5%. Chinese manufacturers have great potential in the simulation market. The company is also carrying out diversified layout in the application and product end of the industry. According to the top five customers disclosed in the prospectus, the main source of revenue of Shanghai Hollywave Electronic System Co.Ltd(688682) is the military industry. In recent years, the company has also continued to expand in the civil field. The solutions provided include: prototype of base station OTA measurement system for 5g communication, EMC / EMI test scheme for intelligent vehicles, antenna and T / R component measurement system for LEO satellites, etc. The company continues to expand its business around the measurement and calibration system of phased array antenna and T / R components, and provides hardware in the loop simulation, electromagnetic CAE software analysis and simulation, and phased array antenna products. The diversification trend of application fields and product matrix is obvious.
The high prosperity in the downstream drives the rapid growth of performance, increases the research and development of “simulation and test integration” and launches electromagnetic simulation caerdsim1 0 1) On the revenue side, the company achieved revenue of 88 million yuan in H1 of 2021, a year-on-year increase of 38.91%, and 156 million yuan in the first three quarters of 2021, a year-on-year increase of 23.45%. The rapid growth at the revenue end is mainly driven by the high prosperity of the downstream military industry market and the continuous improvement of phased array antenna penetration. Aiming at this market, the company mainly provides phased array antenna calibration and measurement system and radar cross-sectional area (RCS) measurement system. The industrial trend of localization has accelerated the expansion of this business. On the profit side, the company realized a net profit of 6.91 million yuan deducted from non parent company in H1 of 2021, with a year-on-year increase of 30.22%; In the first three quarters of 2021, the net profit of non parent company was deducted by 15.28 million yuan. Excluding the impact of equity incentive, the net profit of parent company was 22.97 million yuan, a year-on-year increase of 50.63%. On the cost side, the cost rate of 2021h1 company was basically the same as that of the same period last year, and the R & D cost increased by 56.6% year-on-year to 9.21 million yuan. The main investment directions include the R & D of millimeter wave phased array antenna products and the development of three-dimensional electromagnetic simulation software. 2) In terms of new product release, the company officially released the three-dimensional electromagnetic simulation software rdsim1 at the national antenna annual conference Q4 in 2021 Version 0, the product covers many fields, such as rapid design optimization of unit antenna / phased array, platform layout simulation / EMC Simulation problem solving, complex electromagnetic environment simulation and so on. It can realize the simulation analysis of electromagnetic field problems of any three-dimensional structure. The application fields include antenna / antenna array, microwave devices and radar scattering, so as to help product designers in relevant fields quickly simulate the electromagnetic performance of products, so as to significantly improve the product design efficiency and reduce the design and R & D cost. R & D and design industrial software is one of the “neck” technologies. On the one hand, with the encouragement of policies, it is conducive to accelerating the ecological construction of software and customers. In addition, the advantage of “integration of simulation and testing” has been further expanded.
The acquisition of Hongjie electronics expands the business boundary of calibration and measurement, and the phased array antenna products are expected to be in large quantities in the future. 1) Acquisition and Merger: according to the company’s announcement, Shanghai Hollywave Electronic System Co.Ltd(688682) plans to acquire 51% equity of Hongjie electronics and accelerate the expansion of calibration and measurement business boundary. The R & D and application of RF characteristic measurement technology of Hongjie electronic long-term deep ploughing system mainly provides measurement and application test technical support for the R & D and production of satellite, radar, communication and electronic countermeasure systems. This acquisition enables Shanghai Hollywave Electronic System Co.Ltd(688682) ‘s calibration and measurement business to expand from antennas to t / R components. At the same time, the reuse of customer resources is realized. By virtue of Hongjie electronics’s rich project experience in the field of RF characteristics of satellite load and micro discharge measurement, the industry field involved by the company has expanded from national defense and military industry to satellite industry chain. 2) Phased array antenna products: the company actively develops new millimeter wave phased array antenna to meet the potential development and production needs of low-cost and miniaturized new phased array antenna. As a component module positioned in special industries, phased array antenna is expected to achieve rapid growth in revenue in the future.
Investment suggestion: with the continuous climbing of China’s industrial chain, the value of simulation industrial chain needs to be explored. The company is the pioneer of China’s electromagnetic CAE software and has a certain first mover advantage. At the same time, the company’s measurement and calibration system shows its leading technology and is widely used downstream. On the whole, the company’s industry has large localization space and high prosperity in both simulation and measurement calibration fields. We expect that the company’s revenue from 2021 to 2023 will be RMB 324 / 478 / 644 million respectively, and the net profit attributable to the parent company will be RMB 63 / 0.86/122 million respectively. It will be covered for the first time and given a “Buy-A” rating. As the company is still in the growth period, we give a six-month target price of 164.50 yuan / share, corresponding to 50 times of the net profit in 2023.
Risk tips: 1) the development of key core technologies and business models of industrial software is not as expected; 2) The continuity and support of relevant software policies are uncertain; 3) Product application and promotion and industrial ecological construction are not as expected; 4) The supply of professionals is insufficient.
