Fibocom Wireless Inc(300638) (300638)
Event: on November 27, 2021, the company issued the report on issuing shares and paying cash to purchase assets and raise supporting funds (Draft) (Revised Version) and the reply of Shenzhen Stock Exchange to the inquiry letter on restructuring.
comment:
The company plans to issue shares and pay cash to purchase Ruiling wireless assets
According to the latest announcement, the company plans to purchase 34% equity of Ruiling wireless jointly held by Qianhai laterite and Shenzhen Venture Capital by issuing shares at an issue price of 33.87 yuan / share; Purchase 17% equity of Ruiling wireless held by Jianhua Kaiyuan by paying cash. After the completion of this transaction, the company will hold 100% equity of Ruiling wireless. The transaction price is 517 million yuan based on 100% equity of the target company, and the transaction price of the assets to be purchased (i.e. 51% equity) is 263.67 million yuan.
The company plans to issue shares to no more than 35 qualified specific objects by bidding to raise supporting funds, and the total amount of funds raised shall not exceed 170 million yuan. After deducting the issuance expenses and other related expenses, the raised supporting funds are intended to supplement working capital and invest in the R & D and industrialization project of high-performance intelligent vehicle networking wireless communication module. This measure further improves the company’s layout in the field of vehicle module, strengthens the R & D capacity, and helps the company enter the field of global vehicle wireless communication module, Expand greater market space under the industry dividend of accelerated penetration of automotive intelligent network.
Ruiling’s wireless vehicle module business is the world’s leading, forming a synergistic effect with the company’s vehicle business
Ruiling wireless vehicle business is a global leader, and its cooperative customers are stable for a long time. According to zoth industrial research, the market share of Ruiling wireless in the vehicle wireless communication module Market in 2019 and 2020 is 17.6% and 19.1% respectively. Ruiling wireless has many downstream customers, The largest customer is lgelectronics (corresponding to Volkswagen Group), the sales amount to LG in 2020 was 856 million yuan, a year-on-year increase of 209.84%, mainly because 4G products officially entered the stage of large-scale mass production in 2019. At the initial stage of mass production, the sales volume increased rapidly. From January to August 2021, the sales proportion of Ruiling wireless to LG exceeded 50%, accounting for a relatively high proportion. In addition to Tier 1 manufacturers such as LG, Ruiling wireless downstream customers also include vehicle manufacturers Long term stable relationship:
1) Tier1: lgelectronics, Marelli, Panasonic, etc;
2) Vehicle manufacturers: Volkswagen Group, Peugeot Citroen Group (PSA), Fiat Chrysler (FCA) (PSA and FCA merged into stellantis in January 2021), etc.
Ruiling wireless has stable revenue and 4G contributes the most. From January to August 2021, the revenue of Ruiling wireless was 1.53 billion yuan, of which 4G products contributed the most to the revenue, accounting for 86.67%, with an average unit price of 235.61 yuan / piece, and 3G products contributed 13.33% to the revenue, with an average unit price of 140.18 yuan / piece. From January to August, the overall gross profit margin of Ruiling wireless was 11.69%,
Ruiling wireless’s gross profit margin has declined slightly due to the impact of upstream chip price rise, and is expected to recover in the future. In 2019 and 2020, the gross profit margin of Ruiling wireless remained stable, 13.32% and 13.43% respectively. From January to August 2021, the overall gross profit margin of Ruiling wireless decreased, 11.69%, 1.74 percentage points lower than that in 2020, mainly affected by the rise in the price of upstream raw materials. In the future, with the further improvement of upstream shortage, the gross profit margin level is expected to recover.
After the acquisition, Ruiling wireless will form synergy in the company’s vehicle business. Its core technicians bring R & D experience, and its products have passed various certifications. Ruiling wireless has an experienced and professional leading technical talent team. The core technicians are those who have been engaged in the research and development of on-board wireless communication modules for many years. The joining years are more than 10 years, and there is no loss of core technicians and other major changes. So far, there are 4 core technicians. In terms of products, Ruiling wireless communication module products have obtained CCC (China), FCC (USA), Ce (EU), KCC (Korea), IC (Canada), Anatel (Brazil), JRF / JRA (Japan) and ACMA (Australia) and other countries and regions. Through the acquisition, the company and Ruiling wireless form a synergy in technology and resources, and quickly enter the vehicle business, which is conducive to further improving the global strategic layout of the Internet of vehicles.
“Car + laptop + pan IOT” co cast IOT module faucet
Three core points outline the company’s long-term growth curve: 1) the laptop + POS module is the firm business cornerstone of the company. The laptop module is bound to major customers, with stable traffic and stable demand in the future; 2) 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; 3) The fragmentation of IOT downstream leads to many outbreak 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.
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 52.51 times, 38.64 times and 29.16 times of PE, maintaining the “buy” rating.
risk factor
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
