\u3000\u3 Guocheng Mining Co.Ltd(000688) 636 Chengdu Zhimingda Electronics Co.Ltd(688636) )
Key points of the report:
China is a leading provider of military embedded computer modules with strong technical strength
Founded in 2002, the company mainly provides customized embedded computer modules and solutions for military customers. The company has mastered the core technology of various types of military embedded computer modules and formed a complete set of development and production control process and product quality traceability system. The products are used for airborne, shipborne, missile borne and vehicle mounted platforms of military equipment. From 2017 to 2021, the CAGR of the company's operating revenue reached 27.36%, and the CAGR deducting non attributable net profit reached 45.91%. In June 2021, the company issued the restricted stock incentive plan for 2021 (Draft). This incentive plan intends to grant 97 incentive objects with a total of no more than 1060600 shares. The performance evaluation goal is: Based on the net profit in 2020, the net profit growth rate in the three fiscal years from 2021 to 2023 shall not be less than 40%, 70% and 100% respectively.
The upgrading of national defense weapons and equipment has accelerated, and private military enterprises have ushered in development opportunities
China's defense budget has grown steadily, and the upgrading of weapons and equipment has accelerated. According to the prediction of Zhongyan Puhua database, China's defense informatization expenditure will increase to 251.3 billion yuan by 2025, and the CAGR will reach 11.62% from 2014 to 2025. Embedded computer is the basis of military equipment informatization. According to the data of the Ministry of industry and information technology, the market scale of China's embedded system industry reached 45.94% from 2011 to 2017. In recent years, the state has issued a series of policies to encourage private enterprises to participate in military projects. Private enterprises with military qualification are expected to fully benefit from the effective promotion of industrial system reform.
Build product self-development capability, enhance core competitiveness, and drive long-term growth through sustainable R & D
1) profound technological accumulation: the company has maintained high R & D investment. By the end of June 2021, the company has 32 patents (7 invention patents) and 159 software copyrights; 2) Continue to obtain new projects to promote sustainable growth: 115, 97, 117, 51 and 167 projects were newly approved from January to June 2017 and 2021 respectively. In September 2021, the company announced that it plans to invest 178 million yuan to increase the capital of mingkesi micro, which will help strengthen its technical advantages in the field of high-speed and high-precision ADC; 3) Excellent financial performance: compared with competitors in the same industry, the company's operating revenue has a stable growth rate and excellent net profit margin.
Profit forecast and investment suggestions
The company focuses on the field of embedded computers. With the continuous development of China's military information industry, the company has a broad growth space in the future. The operating income of the parent company is RMB 1.29 billion and RMB 2.26 billion respectively, corresponding to the net income of the parent company of RMB 1.29 billion and RMB 2.26 billion respectively, which is estimated to be RMB 1.25 billion and RMB 2.26 billion in 2024, respectively, and the net income of the parent company is RMB 1.29 billion and RMB 2.26 billion respectively. Since its listing, the PE of the company has mainly operated between 35-75 times. Considering the growth of the company, the target PE of 55 times in 2022 is given, and the corresponding target price is 165.00 yuan. Recommend for the first time and give a "buy" rating.
Risk tips
Covid-19 recurrent pneumonia; Changes in national defense policies and military budgets; High customer concentration; Product development is not as expected; Accounts receivable account for a large proportion; Military audit pricing of military products has an impact on business performance.
