\u3000\u3000 China Marine Information Electronics Company Limited(600764) (600764)
Key investment points
It is mainly engaged in underwater acoustic defense, specially installed electronics and information industries, accounting for 49%, 32% and 18% of its revenue. The company is a listed platform of electronic information industry under China Cssc Holdings Limited(600150) group. It is a core supplier of underwater information construction, underwater acoustic defense system and underwater specially installed electronics in China. It is expected to benefit from the integration planning of shipbuilding group, the construction and maintenance of Navy, and the great development of marine seabed monitoring network in the future Underwater combat Corps layout. The two asset restructuring established the leading position of the company’s marine defense equipment. In 2017, the equity of Great Wall Electronics and Sisco was injected through major asset restructuring, and in 2019, the equity of Haisheng technology, Jerry holding, Liaohai equipment, Qingdao Jerry, Jerry electronics and China Shipbuilding Yongzhi were injected into a number of core assets and technologies of underwater acoustic information equipment, so as to establish the leading position of the company.
Strong profitability and steady growth: the growth rate of revenue and profit in 2020 is 15% and 16%, the average roe and ROA in recent three years are 11% and 11% respectively, and the gross profit margin and net profit margin in 2020 are 34% and 16% respectively.
Underwater acoustic defense accounts for nearly half, and various sonars benefit from ship supporting + submarine monitoring network
There is a great demand for new ships and maintenance, and the sonar “consumables” are growing beyond the downstream: the company has strong technical strength in underwater acoustic defense (accounting for 49%), many models and high market share. A variety of sonars are widely equipped with all kinds of water ships and underwater submarines in China, which is in a monopoly supply position; Benefiting from the long-term construction and development of the Chinese Navy, the company’s sonar products are expected to exceed the growth rate of downstream assembly; Considering that the sonar is in contact with sea water for a long time, the maintenance and replacement frequency is high, and the new + maintenance market is broad; The seabed monitoring network opens up the long-term growth space of the company: the coastline of the Chinese mainland is complex and the sea struggle is complicated. As the core information collection and acquisition equipment of the seabed monitoring network, the company’s sonar products are expected to develop rapidly in the construction of the observation network in the future.
Underwater three-dimensional attack and defense has become a future development trend, and unmanned underwater vehicles are expected to open up a new growth curve of the company
Underwater attack and defense is an important part of underwater combat system. Unmanned underwater vehicle (UUV) will become one of the important components of underwater combat system in the future; China has actively participated in the research of unmanned underwater vehicles. There is a large demand for unmanned underwater vehicles in the future. As the core supplier of supporting sonar for unmanned underwater vehicles, the company is expected to obtain high returns with the increase of demand.
Profit forecast and valuation
The merger of the group is expected to accelerate asset integration. As the group’s electronic information listing platform, the company is expected to build a leading enterprise in marine informatization. At present, the group has a large amount of related assets outside the company. Taking into account the needs of the company’s sonar supporting ships for new addition, maintenance, underwater early warning and monitoring and UUV, it is estimated that the net profit from 2021 to 2023 will be 840 million, 1.04 billion and 1.23 billion, with a growth rate of 12%, 23% and 19%, a compound growth rate of 18%, pe27, 22 and 18 times. It is covered for the first time and given a buy rating.
Risk tips
The construction of ships is less than expected, and the construction of underwater early warning and monitoring is less than expected.
