Bestechnic (Shanghai) Co.Ltd(688608) (688608)
Report cause
This article is the second in the Bestechnic (Shanghai) Co.Ltd(688608) series of reports. It mainly studies and calculates the new space opened by the company’s new business in the next two years from the perspective of expanding the business of smart watches, smart speakers and WiFi chips.
Investment summary
Major health functions have been implemented one after another, and the penetration of smart watches is expected to speed up. In 2020, the global total sales volume of smart watches reached 194 million, and smart watch products have achieved initial success. Health monitoring is the core selling point of smart watches. With the continuous implementation of the two heavy health functions of blood pressure and blood glucose, it is expected to promote the transformation of smart watches from optional products to mandatory products. The products may usher in a new round of popularization and penetration. It is expected to increase to 510 million units by 23 years, and the compound growth rate will increase to 38% in the next three years. At the same time, as major mobile phone manufacturers increase investment in the field of smart watches, smart watches are also expected to replicate the process of TWS branding, and the penetration of branded smart watches is accelerated.
The penetration and acceleration of smart watches pushed SOC into a high-speed growth period, and the SOC progress of hengxuan watches exceeded expectations. The cost of smart watch master chip accounts for about 30%, which is the core benefit direction of the smart watch industry chain. At present, foreign capital accounts for 7 components in the SOC market, Bestechnic (Shanghai) Co.Ltd(688608) expand and apply its twssoc to the watch SOC field, launch the industry-leading SOC scheme to replace the split scheme, and the first generation of smart watch SOC products are successively launched in Huawei, Xiaomi, vivo and other brand customers, It is estimated that the volume will increase in 22 years. The new generation SOC, which has been upgraded in 22 years, is expected to be fully introduced into Android brand customers and replicate the rise process in twssoc; Since the SOC of watch is about three times the price of TWS headset SOC, the company will open up a new space no less than twssoc.
The prospect of WiFi chip is promising, and the company is expected to open 10 billion new space with its comprehensive strength. Hengxuan WiFi / Bluetooth dual-mode SOC is the first integrated speaker scheme based on RTOS in the industry. It has supplied Alibaba, Huawei and Xiaomi intelligent speakers in batches to preliminarily verify hengxuan’s strength in the field of WiFi chips; The wifi6 dual-mode chip mass produced in 22 years is expected to break through the WiFi chip market monopolized by foreign capital. According to the prediction of electronic enthusiast network, only China expects that the corresponding medium and high-speed data card wifi6 chip market will reach 10.7 billion yuan by 2023, with sufficient domestic substitution space. At present, the company is progressing smoothly, and it is expected that the scale will contribute new growth momentum in 23 years.
Profit forecast
Maintain the “buy” rating. We expect that the company will realize a net profit attributable to the parent company of RMB 480 / 720 / 1.19 billion in 2021-23, with a year-on-year increase of 143.8% / 49.2% / 65.0%, corresponding to EPS of 4.03/6.01/9.92, and PE valuation of 75.68/50.73/30.75 times in 21-23; As a leading low-power SOC company, it benefited from beta and alpha in the industry. At the same time, the platform expansion was initially successful, and smart watches, speakers / home products and WiFi chips were gradually implemented, opening up new growth space.
Risk statement
The price rise of OEM and product iteration are lower than expected
