\u3000\u3 Shengda Resources Co.Ltd(000603) 236 Quectel Wireless Solutions Co.Ltd(603236) )
Key investment points
Announcement summary: the company released the performance express in 2021, realizing an operating revenue of 11.21 billion yuan, a year-on-year increase of 83.60%, and the net profit attributable to shareholders of listed companies was 351 million yuan, a year-on-year increase of 85.95%. After deducting non recurring profits and losses, the net profit attributable to shareholders of listed companies was 323 million yuan, a year-on-year increase of 89.76%.
The annual revenue increased sharply, and the profit met the expectation. In a single quarter, Q4’s revenue and net profit attributable to its parent company reached a record high, of which the revenue was 3.734 billion yuan, a year-on-year increase of 96.77%, a month on month increase of 18.15%, and the net profit attributable to its parent company was 115 million yuan, a year-on-year increase of 78.97%. The annual revenue grew by more than 80% year-on-year, exceeding market expectations, mainly driven by the strong demand in the downstream market of the Internet of things outside China. The company continued to enrich and optimize its product structure, formed a one-stop solution including cellular communication module, WiFi & BT module, GNSS module, antenna and cloud platform, and provided products and technical services to more than 8500 customers outside China, During the reporting period, the sales revenue of vehicle, intelligent security, gateway, wireless payment, laptop and other fields increased significantly. According to the data of counterpoint, the company ranks first with 31.6% of the global shipments of cellular Internet of things modules in 21q3, with a month on month increase of 10.4pct and a stable leading position. Affected by the price rise of upstream raw materials, the company’s gross profit margin in the first three quarters was 18.48%, down 1.86pct year-on-year. The company actively prepared goods to cope with the fluctuation of the supply chain. As of the end of the third quarter, the inventory was 3.065 billion yuan, an increase of 1.13% over the beginning of the year. It is expected that the company’s gross profit margin will improve with the release of production capacity and the improvement of product structure. On the cost side, the company has continuously strengthened internal management and improved operation efficiency, with a year-on-year decrease in the cost rate during the period. The expansion of revenue scale combined with good expense control ability, the annual net interest rate was about 3.14%, an increase of 0.09pct year-on-year, and the profitability was better.
The Internet of things industry is booming, R & D and production expansion consolidate the leading advantage. GSMA predicts that in 2025, the number of Internet of things connections will reach 25 billion, the global Internet of things market capacity will reach US $1.1 trillion, and the CAGR will exceed 20% from 2019 to 2025. The demand for communication modules will continue to grow. According to counter point data, the shipment of 21q3 global cellular Internet of things modules is affected by NB IOT and 4G cat 1. Driving the year-on-year growth of 70%, the revenue exceeded US $1.5 billion, and the growth rate of 5g module exceeded 700%. The module industry presents an oligopoly competition pattern, and the share is constantly concentrated to domestic manufacturers. 21q3 Chinese manufacturers contribute nearly 60% of the global shipments. By strengthening R & D and production expansion, Huayuan has consolidated its leading position. The company has set up R & D centers in Shanghai, Hefei, Foshan, Vancouver and Belgrade to lead the product and technological innovation of 5g, lpwa, intelligent modules and c-v2x. As of 21h1, it has developed nearly 30 5g modules supporting 3GPP R15 and R16 standards, covering Qualcomm, zhanrui, MediaTek and other platforms, Formed a rich vehicle product portfolio to meet the differentiated needs of automobile manufacturers in different regions of the world, and provided customers with industrial solutions such as intelligent two wheeled vehicle, BMS and intelligent power distribution through the independently developed Internet of things cloud platform. During the reporting period, the company completed the fixed increase and raised 1.06 billion yuan to invest in the global intelligent manufacturing center construction project, R & D center upgrading project and intelligent vehicle networking industrialization project, of which the “global intelligent manufacturing center construction project” invested 853 million. It plans to build 20 production lines in Changzhou, and will form a production capacity with an annual output of 90 million wireless communication modules by the year when it reaches production capacity. With the promotion of the company’s production expansion, the scale effect will gradually appear, and the market share is expected to be further improved.
Accelerate the application of vehicle modules, actively layout and build new growth points of performance. Under the trend of automobile intellectualization and networking, the market scale of on-board communication module will increase significantly. The company has laid out the on-board field earlier and developed product lines corresponding to different vehicle specification platforms, which can meet the technical iteration needs of vehicle manufacturers for intelligent vehicles. The products cover 5g, LTE, c-v2x vehicle specification communication modules, as well as on-board intelligent Android module, WiFi & Bluetooth module GNSS positioning module, vehicle antenna, etc. are widely used in T-box, smart antenna, vehicle navigation system, networked vehicle system, aibox and other fields. At present, more than 35 well-known OEMs and more than 60 mainstream Tier1 manufacturers around the world use the company’s products to support their vehicle intelligent connection, and 5g + c-v2x series modules successively support a variety of models to achieve mass delivery, Including Chinese express Gaohe hiphi x, Great Wall Motor Company Limited(601633) Haval H6, wey brand mocha and other models. The vehicle specification level module has high technical and qualification certification barriers, and the company has a certain first mover advantage. At the same time, it is expected that with the implementation of the intelligent vehicle networking industrialization project in the fixed increase fund-raising, the company’s vehicle networking product structure will be further optimized, enhance the industrialization ability of personalized wireless communication modules for various vehicle networking customers, provide customized solutions and improve product competitiveness, Contribute to the company’s performance.
Investment suggestion: Quectel Wireless Solutions Co.Ltd(603236) is the global leader in cellular Internet of things modules, with the overall market share increasing rapidly. The product matrix is expanded from cellular modules to WiFi & BT modules, antennas and cloud platform services. With the scale effect of capacity expansion, the scale of revenue maintained rapid growth. It is estimated that the net profit of the company from 2021 to 2023 will be 351 million yuan / 546 million yuan / 808 million yuan, maintaining the “buy” rating.
Risk warning: industry competition intensifies the risk; The development of Internet of things is less than expected risk; Risk of price rise of upstream chip raw materials; The public materials used in the research report may have the risk of information lag or untimely update.
