Bestechnic (Shanghai) Co.Ltd(688608) (688608)
Report cause
This article is the first in the Bestechnic (Shanghai) Co.Ltd(688608) series of reports, mainly from the perspective of twssoc business, to explore the performance growth elasticity of the company as a global intelligent audio leader in the next three years.
Investment summary
The industry cost reduction promotes the acceleration of TWS branding, and the placement rate of Android brand is expected to continue to improve. According to the calculation, Apple airplads (including original and high imitation) the placement rate of corresponding iPhone has reached 80%, of which the placement rate of original factory is close to 50%. The market believes that 50% is also the ceiling of the placement rate of Android brand TWS headphones. We believe that with the improvement of TWS localization rate, Android brand TWS has rapidly reduced its cost. Since this year, the price of new products has entered the traditional white brand price range, the price advantage of white brand has been significantly weakened, and the placement of Android brand The rate is expected to continue to improve. We estimate that in the future, the placement rate of Android brand TWS is expected to rapidly increase from 12.8% in 20 years to about 33.7% in 23 years, and is expected to reach 80% in the long run, with large growth space.
Benefiting from the increase in the placement rate of brand TWS headphones, the twssoc market has ushered in a stage of rapid development. SOC is the core of pure hardware TWS products. According to our calculation, in 2019, the global market space of non-A brand twssoc will be 2.69 billion yuan, benefiting from the increase of placement rate. It is expected that the market scale will increase to 7.1 billion yuan in 2023 and the four-year CAGR will be 38%, which is expected to realize three times the growth space in four years, and twssoc will usher in a high-speed development stage.
Android twssoc market pattern has been preliminarily established, and hengxuan’s share is expected to continue to increase. With localization, leading process, serialization and rapid iteration, hengxuan has achieved a comprehensive breakthrough from Chinese brands to overseas brand customers. In the future, while stabilizing its position in the industry, it is expected to further improve its market share in other brand customers. We predict that the company’s twssoc revenue will increase from 530 million in 19 years to 4.1 billion in 23 years, with a compound growth rate of 67%, and the corresponding market share of Android twssoc revenue will increase from less than 30% to nearly 57%. At the same time, referring to the gross profit margin of mobile phone SOC suppliers, we believe that after the rapid penetration of the industry and the establishment of the pattern, the gross profit margin of head SOC manufacturers will remain stable for a long time.
Profit forecast
The first coverage is given a “buy” rating. We expect that from 2021 to 2023, the company will realize a net profit attributable to the parent company of RMB 480 / 72 / 1.19 billion, a year-on-year increase of 143.8% / 49.2% / 65.0%, corresponding to EPS of RMB 4.03 / 6.01 / 9.92 and PE value of 69.1 / 46.3 / 28.1 times. As a low-power SOC supplier, the company benefits from the improvement of industry penetration and company share. At the same time, through platform expansion, smart watches and audio / home products are gradually implemented, further opening up growth space.
Risk statement
The price rise risk of the agent factory, the product iteration is lower than expected, etc.
