\u3000\u3 Shengda Resources Co.Ltd(000603) 236 Quectel Wireless Solutions Co.Ltd(603236) )
Event:
The company released the operation from January to February 2022, and achieved an operating revenue of about 1.9 billion yuan from January to February, with a year-on-year increase of about 68%; The net profit attributable to the parent company was about 66.6 million yuan, an increase of about 50% year-on-year.
Our comments are as follows:
1. The high growth of revenue continues, and the deepening layout and development of IOT module leaders can be expected
The company's operating revenue continued to maintain a high growth, mainly due to the high prosperity of the Internet of things industry. At the same time, the company continued to explore and deepen downstream application fields, continuously innovate products according to market demand, enrich and optimize product structure, and form a complete and diverse product layout, covering 2G / 3G / 4G / 5G cellular communication module, Wi Fi module, GNSS module, lpwa module, antenna, cloud platform, etc, Meet the growing diversified needs of the Internet of things. In addition, the company actively develops markets and customers, and vigorously expands downstream customers with the help of strong sales channels in more than 150 regions around the world. At present, customers in the vehicle field have expanded 35 main engine manufacturers and more than 60 mainstream Tier1 manufacturers. We believe that with the continuous high prosperity of downstream industries and the company's continuous development of end customers, the revenue can maintain a high growth period.
2. The profit margin has declined, and we are actively looking forward to the relief of the pressure on the cost of raw materials
The profit margin of the company has declined. We believe that the main reason is that the price rise of upstream raw materials leads to the increase of cost pressure. We actively look forward to the easing of raw material cost pressure in the future. At the same time, the scale effect of the company is gradually emerging, the cost control is gradually effective, the profit margin is expected to increase again, and the growth rate of net profit is expected to increase.
3. Under the high prosperity of the industry, the scale continues to grow, and the company's share is expected to continue to increase, benefiting fully
With the rapid growth of connectivity, the golden age of the Internet of things is coming. According to the statistics of IOT analytics, the number of Internet of things connections has been flat in 2019, and the number of non internet of things connections is expected to increase rapidly at a compound growth rate of 21%. At the same time, according to the three-year action plan for the construction of new infrastructure of the Internet of things (20212023) jointly issued by eight ministries and commissions, the construction of the Internet of things will be vigorously promoted, and the number of Internet of things connections in China will exceed 2 billion by the end of 2023. In terms of market scale, according to Zhiyan consulting data, at present, the scale of China's Internet of things market has exceeded RMB 2 trillion, with a year-on-year growth rate of more than 20%. IDC predicts that the scale of the global Internet of things market is also expected to reach US $1.1 trillion in 2025. The Internet of things provides traffic between objects and creates new traffic value. We expect that the application field will continue to expand and the market scale will continue to increase in the future.
Looking forward to the future, the company's Internet of things share is expected to continue to increase rapidly, and the scale effect is expected to continue to appear under the trend of high income growth: 1) in the past few years, the company's income growth rate has been significantly higher than the industry growth level, and the market share has increased significantly in recent years; 2) The company has rich product series and strong competitiveness of 4G & 5g products, which has a leading advantage under the continuous iteration of network system in the future; 3) The company has a wolf culture, focuses on R & D and strong sales. On the basis of the existing scale advantages, the company has certain advantages in purchasing cost / stabilizing the supply chain. At the same time, the self built production line continues to be put into operation, and the raised investment will build 20 production lines in Changzhou. By the year of reaching production capacity, the company will form a production capacity with an annual output of 90 million modules. In the future, the advantages of the company in customization, rapid delivery and cost control are expected to further appear.
Profit forecast and investment suggestions: benefiting from the rising volume and price of Internet of things modules, the industry demand continues to be strong. Quectel Wireless Solutions Co.Ltd(603236) as a leader in the industry, it has obvious competitive advantages and will fully share the dividends of the Internet of things industry. It is estimated that the net profit attributable to the parent company from 22 to 23 years is RMB 611 million and RMB 915 million, corresponding to the PE of 22 years is 43x, and the "overweight" rating is reiterated.
Risk tip: the sales volume of intelligent Internet connection / new energy vehicles is lower than expected; Fierce competition in the industry and the risk of price decline; The price rise of upstream chips and raw materials affects profitability; The order execution progress is lower than expected, etc
