\u3000\u30 Chongqing Baiya Sanitary Products Co.Ltd(003006) 38 Fibocom Wireless Inc(300638) )
Event: on March 29, 2022, the company released its annual report for 2021. In 2021, the company achieved a total revenue of 4.109 billion yuan, a year-on-year increase of 49.78%, a net profit attributable to the parent company of 401 million yuan, a year-on-year increase of 41.51%, and a deduction of non attributable net profit of 373 million yuan, a year-on-year increase of 42.72%.
Comments:
Continue to invest in research and development, continuously expand the market, and further consolidate the fine management ability
According to the announcement of the company, the company achieved a revenue of 1.256 billion yuan in Q4 in 2021, with a year-on-year increase of 62%, and the net profit attributable to the parent company was 78 million yuan, with a year-on-year increase of 31%; From 2015 to 2021, the compound growth rate of the company’s revenue reached 63% and the compound growth rate of net profit attributable to the parent company reached 50%. Throughout the year, the company performed well in three aspects: R & D, market expansion and fine management:
1) continuous R & D: on the one hand, the company increased R & D investment and layout and released more than 10 new modules, including 8 high-value 5g products; On the other hand, the company has obtained a number of product certifications, such as 5g module fm150-ae and fg150-ae successfully completed the certification of Deutsche Telekom, and obtained the certification of Vodafone, the world’s second largest mobile telecom operator, and successfully went to sea. 5g vehicle specification module an958-ae has passed CCC, SRR and nal certification, and has qualified for mass production and shipment, accelerating the upgrading of the company’s vehicle front module business from 4G to 5g;
2) expand the market: the company actively and continuously increased marketing investment and actively expanded marketing channels. The Fibocom Wireless Inc(300638) first China IOT agent conference was held in Shenzhen to promote the company’s products to the market; In addition, the company also actively carries out technical exchanges and cooperation with downstream customers, starts from modules, develops new markets for solutions, and jointly develops a variety of solutions with downstream customers, such as heavy vehicle exhaust remote monitoring solution, 5gdtu solution, etc;
3) improve the ability of refined management: in 2021, in the environment of shortage of raw materials, the company’s supply chain focuses on the upgrading of the basic ability of key business links as the focus of organizational capacity-building, personnel sorting and professional ability improvement are carried out continuously, automatic production is fully promoted in outsourcing processing plants, and is committed to reducing costs while ensuring delivery
In terms of revenue structure, the proportion of Chinese business increased, and the proportion of overseas business in revenue decreased slightly. The company continued to develop its business at home and abroad and continuously improved its market share. In 2021, the proportion of overseas revenue was 57.88%, slightly lower than that of last year. It is preliminarily expected to be affected by the overseas epidemic. China has formed four business regions: South China, East China, North China and southwest. In 2021, China’s revenue accounted for 38.65%, mainly from South and East China.
The gross profit rate decreased slightly and is expected to recover after the upstream shortage is alleviated
From the perspective of profitability, the company’s gross profit margin and net profit margin remained relatively stable month on month under the influence of factors such as the rise in the price of upstream raw materials and repeated epidemics. The gross profit margin of the company is generally stable at about 25%, 24.10% in 2021; The net interest rate of the company is stable at about 10% as a whole, and 9.77% in 2021. On the whole, the profitability of the company is stable and slightly changed. The profitability of the company decreased slightly in 2021, mainly due to the shortage of raw materials in the upstream and the impact of the epidemic. It is expected that in the future, with the alleviation of the shortage of materials, the epidemic will be further controlled, and the profitability of the company is expected to recover.
The fine management ability was further improved, and the overall cost control was good
From the cost side, the company’s fine management ability was further improved, the overall cost control was good, and the cost rate decreased during the period. In 2021, the company’s expense rate decreased as a whole, the sales expense rate was 3.21%, a year-on-year decrease of 0.5 percentage points, the management expense rate was 2.09%, a year-on-year decrease of 0.9 percentage points, and the financial expenses had a weak impact on the whole due to the small amount. On the one hand, the decrease of expense rate is due to the rapid growth of the company’s revenue, on the other hand, it also reflects the company’s attention to fine management ability, and the further improvement of expense control ability, which will be conducive to the long-term sustainable development of the company in the future, and maintain good expense expenditure and management ability under the condition of further expansion of volume.
R & D investment has been increasing, and the subsequent growth momentum is sufficient
The company pays attention to R & D and continues to invest, and continues to carry out technological innovation and research and development to provide sustainable power for subsequent development.
In 2021, the company invested 429 million yuan in R & D, with a year-on-year increase of 48.96% and a R & D expense rate of 10.44%. It mainly invested in three major projects: 5g series wireless communication module project, 2021, 4G series wireless communication product line optimization project and 2021 NB wireless communication module product optimization project, of which 5g project is planned to achieve mass production in 2022.
The company’s R & D system continues to grow and improve, and the number of R & D personnel continues to rise. As of December 31, 2021, the total number of employees of the company is 1645, including 1027 R & D personnel, accounting for more than 62.43% of the total. Most of the company’s R & D backbones have many years of industry R & D experience, and have worked in the world’s top 500 enterprises, Chinese scientific research institutes and other industry-leading enterprises; At the same time, the company actively absorbs talents from colleges and universities every year to reserve new forces for the R & D team.
With “pen + POS” as the cornerstone, it is deeply extended to the field of “vehicle + pan IOT”, and the long-term growth curve is clear
We believe that the company’s business has three highlights: the laptop + POS module is the firm business cornerstone of the company, the company’s laptop module is bound to large customers, the traffic is stable, and the demand will rise steadily in the future; The scale of the intelligent Internet connected vehicle market is huge. The company’s acquisition of Ruiling wireless and deep card position vehicle specification module will open a new growth curve; The fragmentation of IOT downstream leads to many explosive points and is difficult to grasp. The company extends the layout of Pan IOT and is expected to take the lead in seizing the explosive opportunities of the Internet of things.
The foundation of pen + POS module is stable, the pen is deeply bound to major customers, and the future demand is uncertain. The company has rich experience in the laptop market and binds the leading major customers of the laptop. With the steady growth of the whole laptop market, the head concentration trend will be further highlighted. The advantages of the company’s major customers are significant. The decline of traffic charges and PC prices in the future is expected to improve the built-in rate of laptop modules and drive the company’s laptop business to maintain a steady and upward trend.
Acquisition of overseas vehicle module enterprises, in-depth layout of vehicle networking business and opening up space for future development. The company plans to purchase the remaining 51% equity of Ruiling wireless by issuing shares / paying cash. After the acquisition, Ruiling wireless will become a wholly-owned subsidiary of the company. Ruiling wireless is the world’s first manufacturer of vehicle front mounted modules and the largest manufacturer of wireless modules in North America. It has accumulated 15 years of industry experience in the field of embedded vehicle front mounted cellular modules. Through the extension and acquisition of Ruiling wireless’s in-depth layout of vehicle business, it will improve the company’s strategic layout of vehicle networking globalization. In addition, in the Chinese market, with the help of its subsidiary Guangtong Yuanchi, the company launched vehicle scale groups covering various needs, low delay and ultra-high reliability, and vertically enriched the on-board product line. In the future, the development of intelligent networked vehicles is expected to open a new growth curve for the development of the company.
The foreshadowing of other businesses is hidden, and the layout comes from the wind of Pan IOT. The business layout of the company has a wide range of downstream application fields, including smart energy, smart retail, smart security and other industries. At present, the Internet of things industry has a good development momentum, and there are many downstream vertical application segments with fragmented characteristics. Once the outbreak point appears, the company is expected to grasp the needs of customers first and seize the growth opportunities quickly.
Profit forecast and investment rating
As a white horse leader in the module industry, the company has a deep layout of the vehicle market based on laptop + pos. at the same time, it has a wide layout in the pan IOT industry, and there is a large space for development in the future. Regardless of consolidation, the net profit of the company from 2022 to 2024 is expected to be 544 million yuan, 707 million yuan and 906 million yuan respectively, corresponding to 27.97 times, 21.49 times and 16.77 times of PE, maintaining the “buy” rating.
Risk factors
The development of the Internet of things industry was not as expected, the intensified competition in the Internet of things industry triggered a price war, and the covid-19 epidemic spread repeatedly
