Meig Smart Technology Co.Ltd(002881) (002881)
Meig Smart Technology Co.Ltd(002881) : the world’s leading provider of wireless communication modules and solutions. During the start-up period (2007-2009), the company mainly engaged in the manufacturing of non smart phone keys and back cases. During the transformation and upgrading period (2010-2016), it transferred to the manufacturing of precision structural parts and started the R & D and design of 4G / LTE modules and applications. In the weak growth period of precision components, the company once again sought a new growth curve (2016-2020): smartphone penetration hit the ceiling, and the sales of precision components business reduced the revenue share of precision components from 75% to 0.11%, and the revenue share of communication modules and terminals increased from 6% to 93.8%. The company’s overall operating revenue increased from 478 million yuan to 1.121 billion yuan, and CAGR reached 72%. 5g applications and the Internet of things entered a period of rapid growth, and the company became the world’s leading wireless communication model Group and solution provider (since 2020): the first to launch 5g high computing power module. From 2021q1 to Q3, the revenue and net profit attributable to the parent increased by 91.69% and 545.46% year-on-year. Both broke through the history and developed into the fast lane. The global market share of cellular Internet of things module of 21q2 company increased to 5.3%, ranking among the top ten in the world.
Industry opportunities: the Internet of things industry is about to develop rapidly, and the communication module will take the lead in benefiting. (1) With the commercial application of 5g technology, the Internet of things industry has ushered in rapid development. The market scale of the Internet of things industry is expected to grow from 1.67 trillion yuan to 2.76 trillion yuan in 20-25 years. (2) Data transmission is the basis for the interconnection of all things. As a necessary component of data transmission, communication module will take the lead in benefiting from the expansion of the Internet of things industry. From 2020 to 2024, the market scale of communication module is expected to increase from 272.5 billion yuan to 414 billion yuan. (3) The company has been deeply engaged in the field of communication modules for many years, has a large number of technical reserves, has a comprehensive product line coverage, and has obtained large orders from many operators outside China.
The company’s strategy: forward looking layout of three high growth tracks, i.e. intelligent Internet connected vehicle, FWA terminal and pan IOT represented by new retail, so as to realize the whole industrial chain layout of each track from module to solution. (1) Intelligent connected vehicle: the penetration rate is expected to increase from 52% to 95% from 2020 to 2030; the company has launched the industry’s first 5g high computing power intelligent module, which has achieved mass commercial use, reached cooperation with mainstream vehicle manufacturers in China, and set up branches in Germany and Japan to vigorously explore the overseas vehicle market; (2) FWA: the rapid development of 5g brings high growth potential, and the CAGR of 5gcpe’s domestic and foreign markets is expected to exceed 100% from 2020 to 2025; the company maintains close cooperation with China United Network Communications Limited(600050) , Huawei and other enterprises, and its position is stable; (3) Pan IOT: the company makes full use of its product advantages of high-performance communication modules, successively develops pan IOT connections, and effectively extends within the industrial chain.
Performance forecast and valuation indicators. We maintain Meig Smart Technology Co.Ltd(002881) the forecast of revenue of RMB 1.751 billion, RMB 2.424 billion and RMB 3.012 billion from 2021 to 2023; Maintain the forecast that the net profit attributable to the parent company from 2021 to 2023 is RMB 128 million, 170 million and 217 million, corresponding to pe68x / 51x / 40x. The company focuses on wireless communication modules and their solutions. Since then, the performance growth has broken through history and entered a rapid growth channel. Considering the high prosperity of the product intelligent module and its great performance growth potential, the “overweight” rating is maintained.
Risk tip: the Internet of vehicles market is not as expected; Fierce competition leads to the risk of decline in gross profit margin.
