\u3000\u3 China Vanke Co.Ltd(000002) 179 Avic Jonhon Optronic Technology Co.Ltd(002179) )
Key investment points
The marketization of two incentives has been at the forefront, and the compound growth rate of revenue and profit since listing has been 24% and 23%
The company is subordinate to AVIC group and is the first military enterprise listed as a whole in China. As one of the few enterprises in the industry that have completed two phases of equity incentive, the company’s market-oriented operation level is in the forefront of the industry. Since its listing in 2007, the company has continued to expand its business through extended mergers and acquisitions, and gradually developed into a leading enterprise in China. According to our calculation, the revenue of civil and special products accounts for about 40-50% and 50-50% respectively.
Domestic connector manufacturers continue to grow, and China’s market continues to grow
As a basic electronic component, connectors are widely used downstream, and the demand growth is stable. Bishop & Associates predicts that China’s connector market is expected to reach US $36 billion in 2025, with CAGR = 8%.
China’s connector market is mainly occupied by Tyco, Amphenol, MOLEX and other international giants. The share of Chinese mainstream manufacturers represented by Avic Jonhon Optronic Technology Co.Ltd(002179) , Luxshare Precision Industry Co.Ltd(002475) , Shenzhen Deren Electronic Co.Ltd(002055) and others is less than 30%, and there is a wide space for domestic substitution.
The modernization of the military has brought the demand for special connectors, and the company, as an industry leader, is expected to fully benefit
According to the data of prospective industry research institute, the compound growth rate of China’s special connector market scale reached 11% from 2010 to 2020. Looking forward to the 14th five year plan, the acceleration of military informatization and modernization will further stimulate the demand for special connectors. Special connector industry has high barriers and stable competition pattern. As an industry leader, the company has a market share of nearly half, and is expected to fully enjoy the strong demand of the downstream. It is expected that the company’s revenue of special connectors will be CAGR = 30% in the next three years.
The volume of new energy vehicles + 5g communication demand is expected to jointly open up the second growth curve of the company
The rise of new energy vehicles has changed the supporting pattern of traditional on-board connectors. The company’s high-voltage connectors for new energy vehicles have quickly opened the market and achieved the first share. Benefiting from the continuous improvement of the penetration rate of new energy vehicles and the company’s market share, the compound growth rate of the company’s vehicle connector business is expected to reach 47% in the next five years. Under the background of accelerated 5g construction, the average annual market space of 5g connectors in China will exceed 8 billion yuan from 2021 to 2025. The company’s customers cover the world’s leading 5g equipment manufacturers, and the orders of communication connectors are expected to continue to grow.
Issued 3.4 billion fixed increase fund-raising to expand production, and the company’s advantageous position was further consolidated
According to the company’s announcement on January 14, the company issued 35576000 shares at a fixed increase price of 95.57 yuan / share and raised 3.4 billion yuan for connector capacity expansion. The completion of the project will provide strong support for the growth of the company’s businesses and further consolidate the company’s advantageous position in the field of connectors.
Avic Jonhon Optronic Technology Co.Ltd(002179) : the compound growth rate of net profit attributable to the parent company is expected to be about 35% in the next three years
It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be RMB 1.99/27.0/3.58 billion, with a year-on-year increase of 38% / 36% / 33%, CAGR = 35%, corresponding to 48 / 35 / 27 times of PE. For the first time, give a “buy” rating.
Risk warning: special business orders are not as expected; The expansion of civil products business is less than expected
