\u3000\u30 Beijing Telesound Electronics Co.Ltd(003004) 96 Thunder Software Technology Co.Ltd(300496) )
Investment summary: Event: the company announced the 2021 annual report and fixed increase plan on March 3-4, 2022.
The performance is basically in line with the expectation: the revenue in 21 years is 4.127 billion (YoY + 57.04%), the net profit attributable to the parent company is 647 million (YoY + 45.96%), and the non net profit attributable to the parent company is 576 million (YoY + 57.29%), which is basically eps1 53（YOY+41.33%） 。
Fixed increment preparation for edge computing: the fixed increment amount is 3.1 billion, which is used for edge computing station R & D and industrialization projects (1.005 billion), vehicle operating system R & D projects (650 million), extended reality (XR) R & D and industrialization projects (360 million), distributed computing network technology R & D projects (185 million) and supplementary working capital (900 million). Viewpoint:
(1) we believe that the smart business of mobile phone, automobile and Internet of things will continue to be high-profile:
Remarkable business results: the company's mobile phone business revenue in 21 years was 1.63 billion, yoy + 40% (mainly the revenue from terminal manufacturers was 1.054 billion, yoy + 47.88%); Automobile business revenue was 1.224 billion, yoy + 58.9% (mainly software development and technical service revenue of 1.082 billion); The revenue of Internet of things business was 1.272 billion, yoy + 82.87%.
The core competitiveness and general trend remain unchanged: the ecological moat of "chip + full stack" of mobile phone business is deep, and the trend of automobile EE towards domain concentration, central computing unit integration and cloud edge end integration of Internet of things remains unchanged.
(2) we believe that in the medium term, the company's large investment in personnel and R & D will continue, which may suppress profits, but make the company's moat more stable:
In the past 21 years, a large number of technicians have been recruited, and the personnel cost has increased significantly. The number of employees of the company increased from 7375 to 11467 in the past 21 years, with 4092 new employees (technicians accounting for 86.75%), which increased the salary of the company's employees by 61.5% to 2.08 billion, and the per capita income increased by only 1% to 35.99 yuan.
The employee follow-up investment system is more perfect: the company has established an innovation business follow-up investment management team to clarify the coverage, participation mode and other specific contents of the company's core employees participating in innovation business follow-up investment.
The amount of R & D has increased rapidly, and fixed increase financing is to prepare for future business. In 21 years, the total investment in R & D was 826 million (YoY + 72%), accounting for 20% of revenue from 18.3%. From the perspective of investment, it is in the direction of edge computing and XR. The purpose is to carry out standardized development around customers and applications.
Combined with the cash flow of the company in recent three years, we believe that the state of personnel expansion + employee follow-up investment + high R & D investment will continue in the future, which will suppress the company's profits, but at the same time, it also means that the company has a clear direction for future development and is making a positive layout, and there is room for market sentiment to be repaired, Therefore, we are optimistic about the long-term development of the company.
Profit forecast and rating: To sum up, we are optimistic about the long-term development of the company. It is estimated that the revenue in 22-25 years will be 5.69 billion, 7.985 billion and 10.95 billion, corresponding to the net profit attributable to the parent company of 856 million, 1.368 billion and 2.038 billion, EPS of 201, 3.22 and 4.79, giving 70 times PE and the corresponding target price of 140.7 yuan, giving a "buy" rating.
Risk tips: market pessimism, huge investment in R & D funds and personnel, less than expected R & D results of key projects, intensified competition and compressed gross profit margin, less than expected mobile car IOT business, increased core shortage, foreign war sanctions and other complex situations.
