\u3000\u30 China High-Speed Railway Technology Co.Ltd(000008) 10 Skyworth Digital Co.Ltd(000810) )
Key investment points
VR equipment: forward looking layout of folding optical path all-in-one machine, benefiting from the first year of large volume of VR terminal equipment in China
We believe that 2021 is the starting point of large-scale VR equipment (represented by oculus) in the overseas market, and 2022 is expected to be the first year of VR equipment outbreak in China. The company’s R & D team is mature and stable. In the past, three products (3DOF) have been released, and the product R & D precipitation continues to mature; Different from the layout and positioning of traditional VR enterprises, the company focuses on b-end users in the early stage and deeply explores the commercial needs of terminals; In the middle of 2022, the company is expected to enter the C-end market by releasing the first pancake VR all-in-one machine in the Chinese market, which is expected to form a product matrix positioned at the multi-layer demand of commercial and civil, and become a potential new star of domestic VR equipment manufacturers.
Intelligent terminal: the leading position of the b-terminal of the operator is stable, and HD upgrade + automotive electronics open up the growth space
According to the business history of the company, from 2018 to 2020, affected by the bidding rhythm of operators, the company’s revenue was in a stable trend; With the ultra-high definition upgrade of set-top boxes in China, Europe and the United States, and the substitution trend from analog signal to digital signal in Asia, Africa and Latin America, the company’s intelligent terminal business has entered the growth cycle again since 2021. As the world’s largest manufacturer of digital set-top boxes, the company’s leading position at the b-end is stable. Relying on the global business layout and stable supply chain management ability, the channel of radio, television and communication operators is deeply bound to effectively thicken the business security cushion; The proprietary Ott business benefits from the replacement and upgrading of ultra-high definition business and widens the profit channel. In addition, focusing on the automotive electronics business, cockpit display products have gradually entered the supplier list of well-known main engine manufacturers such as Chery / Geely / Volkswagen with high-quality products, giving the company a new driving force for the growth of its traditional business.
Profit forecast and valuation
We predict that the company’s revenue from 2021 to 2023 will be 11.311 billion yuan, 14.147 billion yuan and 17.090 billion yuan respectively, with a year-on-year increase of 32.95% / 25.07% / 20.81%; The net profit attributable to the parent company is 485 / 777 / 952 million yuan respectively, and the corresponding EPS is 0.46/0.73/0.90 yuan. As of the closing price on February 28, 2022, the corresponding P / E ratios from 2021 to 2023 are 29, 18 and 15x respectively. Considering that the company’s main business reverse upward + VR business is potentially higher than expected, we give a comprehensive valuation of 25X in 2022 (due to the company’s provision of large credit impairment losses in 2021 / not comparable), corresponding to the first target price of RMB 18.25 and the market value of RMB 19.425 billion. We give a “buy” rating for the first coverage.
Risk tips
New product development is not as expected; Chip supply chain recovery is less than expected; The market demand is less than expected; Exchange rate fluctuations.
