Hytera Communications Corporation Limited(002583) (002583)
1. Event overview
Recently, the company has successively announced the winning orders:
On December 20, the wholly-owned subsidiary of the company won the TETRA system construction and service contract of Public Security Department of Mato Grosso State, Brazil, with the project amount of about 33.96 million yuan.
On December 23, the company signed a contract for the overall solution of digital trunking system with a customer in Africa, with a project amount of about 140 million yuan.
On December 26, the company obtained the letter of acceptance for the project of purchasing public and professional integrated wearable mobile video recorder (public and professional integrated wearable mobile video recorder equipment) from a government customer in Dawan District, Guangdong, Hong Kong and Macao, with a project amount of about 42.16 million yuan.
2. Orders in domestic and foreign markets are in full bloom, and wide and narrow band products go hand in hand
In 2021, the company’s orders, especially those in overseas markets, recovered rapidly. As of December 26, 2021, 9 major overseas contracts (including orders of Brazilian federal Road police, industry partners of a country in Central Asia, Spain Telecom, Bahia, Brazil, customers in a country in Africa building digital trunking communication system, Public Security Department of Mato Grosso, Brazil, etc.) have been successively announced, Compared with the same period last year, the orders improved significantly year-on-year. In the overseas market, the company’s orders continued to recover, indicating that the impact of the patent event on the company’s overseas business gradually decreased and the orders in the overseas market continued to improve.
On the Chinese side, the company continues to obtain large orders in Shenzhen Metro, Nanshan District government and Dawan district. Among them, the bid for public and Private Integrated wearable video recorder in Dawan District, Guangdong, Hong Kong and Macao is representative. The smooth implementation of the project will form a good demonstration effect for the subsequent market expansion of the company’s broadband business and public and private integrated business, and the company has a promising market space in the future.
3. Shenzhen state-owned assets holdings, the company’s operating pressure and financing costs are reduced
On November 1, the company announced that Shenzhen win-win fund transferred 10% equity of Chen Qingzhou, the controlling shareholder of the company, out of confidence in the future development of Hytera Communications Corporation Limited(002583) and expectation of its good investment value.
Shenzhen investment holding, the parent company of Shenzhen investment holding Capital Co., Ltd., the manager of win-win fund, is a state-owned capital investment company and comprehensive financial holding group in Shenzhen. It is one of the world’s top 500 enterprises, and its business covers three sectors: financial holding, science and Technology Park and industrial investment.
The background of state-owned enterprise shareholders plays a strong role in endorsing the company’s Bank credit and business operation. In addition to ensuring the company’s low financing cost and large project support, it also plays a significant role in supporting the company’s long-term benign and rapid development.
4. Investment advice
The repeated overseas epidemic still has a certain impact on overseas business orders. The recovery of overseas orders is slightly lower than expected, reducing the forecast of future revenue. However, considering the continuous release of new orders signed by the company and the gradual growth of China’s order business, we continue to be optimistic about the company’s leading position in the private network. With the mitigation of the overseas epidemic, the company’s business is expected to continue to recover, and the improvement of the demand for China’s rail transit, 5g and public security private network is also expected to drive the basic improvement of the company.
We maintain the profit forecast. It is estimated that the revenue from 2021 to 2023 will be RMB 5.15/59.8/6.98 billion, and the earnings per share will be RMB 0.14/0.22/0.27, corresponding to the closing price of RMB 5.45/share on December 26, 2021, and the PE will be 37.8/24.6/19.9 times respectively, maintaining the “overweight” rating.
5. Risk tips
The overseas epidemic situation continues and repeats, and the customer orders are not sustainable; Sino US science and technology war leads to the instability of the company’s supply chain; Patent disputes with Motorola require large compensation.
