Fibocom Wireless Inc(300638) (300638)
The module industry has a high boom, and the profit of subdivided leaders is stable. The company is one of the top module manufacturers in China. It has been deeply engaged in the module industry for more than 20 years. The CAGR of revenue / net profit attributable to parent company in recent five years is 53.23% / 53.20%, and the gross profit margin / net profit margin in recent three years ranks first in the industry. According to ABI research data, the number of Internet of things terminal connections will reach 6.616 billion in 2020 and 23.72 billion in 2026. The surge in the number of connections opens space for the module industry. 2G / 3G will accelerate the withdrawal from the network, and the future system will evolve to high-value 5g / lpwan. We calculate that the global module industry market will be nearly 60 billion yuan in 2025, and the CAGR will reach 12% in five years.
The card position has outstanding advantages and constructs technical and customer barriers. In recent 5 years, the R & D expense rate of the company has always maintained more than 10%, which is in the forefront of the industry, and casts technical advantages with R & D. The company’s precision card POS / PC Track cooperates closely with Baifu global, HP, Lenovo and other head customers, accounting for 50% of the global market; In the field of vehicle modules, the company has targeted Tier1 customers and has reached cooperation with China Geely, great wall, Byd Company Limited(002594) and other head car manufacturers. It is expected to acquire the remaining 51% equity of Ruiling wireless for a consideration of RMB 264 million, Through its acquisition of Sierra wireless vehicle module business (with a global market share of 19.1% in 20 years, and end customers including Volkswagen Group, PSA and FCA), it accelerated the layout of overseas business and built a high barrier for key customers.
The PC / POS track business is stable, but the ceiling is visible, and the vehicle module business opens a new growth curve. In the next five years, the global PC / POS cellular module Market CAGR will be 20%. Based on the company’s global market share of nearly half, the PC / POS module business is highly deterministic, but the ceiling can be seen. Through acquisition + strategic investment, the company has accelerated its entry into the vehicle module market at home and abroad, benefiting from the rapid improvement of networking penetration and the increase of 5g / c-v2x module demand. It is estimated that the global vehicle module market will be RMB 12.6 billion in 25 years, the company’s vehicle business revenue will be RMB 40 million in 20 years, and the proportion of vehicle module business is expected to reach 20% in 2023, becoming the fastest growing business of the company. In the future, based on POS / PC cash Taurus business, the company will open a new growth curve with vehicle module business, which is expected to turn from product company to platform company.
Investment advice
This report does not consider the consolidation of Ruiling wireless. It is estimated that the company’s revenue from 2021 to 2023 will be 4.147 billion yuan / 5.913 billion yuan / 8.291 billion yuan respectively, the net profit attributable to the parent company will be 415 million yuan / 593 million yuan / 817 million yuan respectively, and the corresponding EPS will be 1 yuan / 1.43 yuan / 1.98 yuan respectively. The company will be given 50 times PE in 2022, the target price will be 72 yuan, and the market value will be 30 billion yuan. It will be given a “buy” rating for the first time.
risk
The promotion of vehicle module business is less than expected; Industry competition intensifies; Shortage of raw material supply; Outsourcing brings production fluctuation; RMB exchange loss, controlling shareholders and executives reduce the risk.
