\u3000\u3000 Fibocom Wireless Inc(300638) (300638)
Event: on February 23, 2022, China United Network Communications Limited(600050) announced the public bidding results of Yanfei CAT1 customized module. The company’s CAT1 module won the bid with the first share, which is another in-depth cooperation with China Unicom after being shortlisted for the bidding of China Unicom Yanfei 5g module with the largest share since May 2021 and fully contracting the procurement project of China Unicom 5g digital transmission module of Internet of things in September.
Comments:
The company has won the bid of Unicom module for many times, which fully reflects its strong competitive strength. The CAT1 module won the bid this time has industrial application quality, has a variety of packaging methods and interfaces, supports the delivery of standard data transmission and opencpu software, and supports volte, audio, camera, display, keypad and other functions, It will further promote the development of China United Network Communications Limited(600050) Internet of things related businesses and jointly promote the maturity of animal networking industry.
The company has maintained long-term cooperation with China United Network Communications Limited(600050) in the field of Internet of things and won the bid with high share for many times, reflecting its strong competitive strength. The company became a member of the China United Network Communications Limited(600050) 5g application innovation alliance in 2020. Subsequently, the two sides jointly released the world’s first 5g + ESIM module. In May 2021, the company was shortlisted for the bidding of Unicom Yanfei 5g module with the largest share. In September of the same year, the company fully contracted the procurement project of Unicom 5g digital transmission module of Internet of things. Looking forward to the future, the company will join hands with China United Network Communications Limited(600050) to jointly promote the large-scale deployment of 5g and strive to build a new ecology of 5g industry.
CAT1 is mainly used in medium rate market with obvious advantages
Lte-cat1 is mainly used in the medium rate market. At the same time, it has four advantages of “low cost, medium rate, mobility and voice”. It solves the mobile and positioning fields not involved in NB IOT. Lte-cat1 refers to the 4G network with terminal communication rate of 1. It has more advantages than Cat4 module on the cost side. It exceeds NB IOT in network coverage and speed delay in time, and is suitable for 4G network. It is suitable for POS and other application scenarios requiring communication speed. CAT1 has the trend of surpassing and phasing out EMTC with its low-cost advantage. Among the low and medium rate cellular network standards, there are usually two standards: CAT1 and cat-m1 (i.e. EMTC). Compared with CAT1, CAT1 has an absolute cost advantage, and its terminal can directly access the existing 4G network (the global 4glte operators are deployed on the basis of the minimum 3gppr8 protocol version, and CAT1 is also deployed on the 3gppr8 protocol), The use of EMTC must rebuild the infrastructure and upgrade the network, and the cost is high. In general, in the medium and low speed field, CAT1 has more cost advantages than EMTC, stronger communication ability than Nb, can transmit larger data, has mobility, real-time and voice functions, and plays a key role in the field of voice data transmission business.
The all-round deployment of the company’s industrial chain is more conducive to seize the downstream explosion point of IOT
There are many long tail industries in the downstream of the Internet of things, with obvious fragmentation characteristics. The market is often more familiar with the company’s planning of laptop and vehicle business, but in fact, the company also has layout in the pan IOT field. We believe that the company is expected to seize the opportunity of downstream application explosion in time. The company has extensive layout in the pan IOT field, actively laying down downstream application fields, involving a number of businesses, and always remains highly sensitive to the development and changes of the downstream market. It is expected to seize the opportunity at the first time when explosives appear. Taking the winning CAT1 as an example, it can be widely used in a variety of application scenarios, such as pan payment, sharing, industrial interconnection, tracking, vehicle rear loading, etc. the company has layout in each application scenario, involving smart energy, smart retail, smart security, cloud office, smart home, smart city, Jiangsu Nonghua Intelligent Agriculture Technology Co.Ltd(000816) etc., connecting many scenarios to help thousands of industries realize the innovation of the Internet of things.
With “pen + POS” as the cornerstone, it is deeply extended to the field of “vehicle + pan IOT”, and the long-term growth curve is clear
We believe that the company’s business has three highlights: the laptop + POS module is the firm business cornerstone of the company, the company’s laptop module is bound to large customers, the traffic is stable, and the demand will rise steadily in the future; The scale of the intelligent Internet connected vehicle market is huge. The company’s acquisition of Ruiling wireless and deep card position vehicle specification module will open a new growth curve; The fragmentation of IOT downstream leads to many explosive points and is difficult to grasp. The company extends the layout of Pan IOT and is expected to take the lead in seizing the explosive opportunities of the Internet of things.
The foundation of pen + POS module is stable, the pen is deeply bound to major customers, and the future demand is uncertain. As the company’s experience in the development of large notebook computer modules will further increase, the company’s price of large notebook computer modules will continue to increase steadily in the market, and the company is expected to maintain a steady decline in the price of large notebook computer modules in the future.
Acquisition of overseas vehicle module enterprises, in-depth layout of vehicle networking business and opening up space for future development. The company plans to purchase the remaining 51% equity of Ruiling wireless by issuing shares / paying cash. After the acquisition, Ruiling wireless will become a wholly-owned subsidiary of the company. Ruiling wireless is the world’s first manufacturer of vehicle front mounted modules and the largest manufacturer of wireless modules in North America. It has accumulated 15 years of industry experience in the field of embedded vehicle front mounted cellular modules. Through the extension and acquisition of Ruiling wireless’s in-depth layout of vehicle business, it will improve the company’s strategic layout of vehicle networking globalization. In addition, in the Chinese market, with the help of its subsidiary Guangtong Yuanchi, the company launched vehicle scale groups covering various needs, low delay and ultra-high reliability, and vertically enriched the on-board product line. In the future, the development of intelligent networked vehicles is expected to open a new growth curve for the development of the company.
The foreshadowing of other businesses is hidden, and the layout comes from the wind of Pan IOT. The business layout of the company has a wide range of downstream application fields, including smart energy, smart retail, smart security and other industries. At present, the Internet of things industry has a good development momentum, and there are many downstream vertical application segments with fragmented characteristics. Once the outbreak point appears, the company is expected to grasp the needs of customers first and seize the growth opportunities quickly.
Profit forecast and investment rating
As a white horse leader in the module industry, the company has a deep layout of the vehicle market based on laptop + pos. at the same time, it has a wide layout in the pan IOT industry, and there is a large space for development in the future. Regardless of consolidation, the net profit of the company from 2021 to 2023 is expected to be 446 million yuan, 606 million yuan and 803 million yuan respectively, corresponding to 43.37 times, 31.91 times and 24.08 times of PE, maintaining the “buy” rating.
Risk factors
The development of the Internet of things industry was not as expected, the intensified competition in the Internet of things industry triggered a price war, and the covid-19 epidemic spread repeatedly
