\u3000\u30 Chongqing Baiya Sanitary Products Co.Ltd(003006) 38 Fibocom Wireless Inc(300638) )
Main points:
Event review:
According to the company’s annual report, the annual operating revenue in 2021 was 4.109 billion yuan, with a year-on-year growth rate of + 49.8%, and the net profit attributable to the parent was 401 million yuan, with a year-on-year growth rate of + 41.5%. After deducting non-profit, it was 373 million yuan, with a year-on-year growth rate of + 42.7%; In a single quarter, Q4 achieved an operating revenue of 1.256 billion yuan, with a year-on-year growth rate of + 61.8%, and a net profit attributable to the parent company of 78 million yuan, with a year-on-year growth rate of + 30.5%. In the past year, the company insisted on high-intensity R & D investment, actively carried out product certification, and carried out fine management of internal and supply chain to overcome upstream adverse factors. The results were remarkable, and the revenue growth was in line with expectations.
The industry’s revenue growth is carefree, and the profit side is expected to improve comprehensively in the second half of the year
In terms of market space, according to IOT analytics data, it is expected that the global IOT connection will exceed 27.1 billion in 2025, with an average annual compound growth rate of 22%, of which the growth rates of cellular Internet of things and low-power wide area network (lpwa) are 16% and 39% respectively. In addition, ABI predicts that the shipment volume of communication modules will exceed 600 million in 2022. We believe that the increased demand for scenarios such as intelligent cockpit, overseas CPE and edge computing gateway is expected to drive the large-scale volume of 5g and other high-speed modules. In terms of market structure, according to countpoint data, 2021q3 Fibocom Wireless Inc(300638) revenue share is 9.6%, ranking second in the world, and Ruiling wireless revenue share is 2.3%, rapidly entering the top ten. With the completion of the acquisition and delivery of Ruiling wireless, the comprehensive competitiveness of Fibocom Wireless Inc(300638) in front of auto enterprises will be greatly increased, and it will remain in the top two position in the world. We believe that the growth of the industry revenue side is carefree and the first two patterns are basically established. At this stage, the supply of upstream communication chips is still tight. The profit side may be comprehensively improved in the second half of the year with the decline of chip prices and the past peak of 5g platform R & D.
Upstream raw material pressure + product structure adjustment gross profit margin is under pressure, and the company’s fine management has achieved remarkable results. In terms of gross profit margin, the company’s comprehensive gross profit margin in 2021 is 24.10%. In a single quarter, Q1 / Q2 / Q3 / Q4 gross profit margins are 25.11%, 25.89%, 25.05% and 21.25% respectively. The decline of Q4 gross profit margin may be caused by upstream raw material pressure on the one hand, product structure adjustment and low gross profit margin in the early stage of vehicle module on the other hand. In terms of expenses, the company’s sales, management and R & D expenses in 2021 totaled 15.74%, a year-on-year decrease of 1.41 PCT. The company improved the organizational operation efficiency by improving the talent echelon training and cadre promotion mechanism, and the scale effect gradually appeared. In terms of inventory, by the end of 2021, the company’s inventory balance was 807 million yuan, an increase of 57% over the beginning of the year, maintaining a high stock level to ensure delivery. In terms of operating cash flow, the company’s net operating cash flow outflow in 2021 was 422 million yuan, mainly due to the increase in cash expenditure caused by active procurement of raw materials and strategic goods preparation. We believe that in the face of the pressure of upstream price rise and shortage and the pain caused by product structure adjustment, the company has maintained a good operating condition and the overall financial statements are healthy through fine management.
In terms of laptop module, according to the data of strategy analytics, the global PC shipment reached 268 million units in 2021, with a year-on-year increase of 19%, and the growth rate decreased. With the recovery of the global epidemic, the growth rate may further decrease or even negative growth. However, the current penetration rate of cellular modules is only about 5%. With the continuous improvement of penetration rate and the listing of higher rate modules such as cat16 / 5G, the company’s PC business will still maintain a high proportion of revenue. In terms of Internet of vehicles modules, the improvement of the penetration rate of on-board front loading has led to the rapid growth of Internet of vehicles modules. In the Chinese market, the assembly rate of new energy vehicles has reached 100%, the assembly rate of traditional fuel vehicles has gradually increased from 30% to 50%, and it is expected to increase to 100% in the long term. In overseas markets, some developed countries in Europe have required the assembly rate of new cars to reach 100%. The main body of the company’s overseas vehicle business is Ruiling wireless, which is mainly for joint ventures and foreign-funded vehicle factories; The main body of China’s vehicle business is Guangtong Yuanchi, which is mainly for Chinese traditional car manufacturers and new forces of car manufacturing. The company released a number of vehicle specification level modules throughout the year, and prospectively laid out the 4G / 5G + v2x field. Benefiting from the large volume of vehicle modules in China, the company’s wireless communication module shipment increased by 36.75% and ASP by 3.86% year-on-year in 2021.
Investment advice
Fibocom Wireless Inc(300638) operation is stable, financial health and equity incentive is in place. The company’s business is transforming from traditional laptop to multiple drivers of laptop, vehicle and pan IOT. Looking forward to the future, the company is facing triple development opportunities: the penetration of laptop modules, the share of vehicle modules and the development of overseas markets. Considering the consolidation of 2022q2, we adjusted the company’s net profit attributable to the parent company from 2022 to 2023 to be RMB 575 / 822 million (the previous value was RMB 608 / 820 million), increased the forecast of net profit attributable to the parent company in 2024 to be RMB 1.11 billion, corresponding to EPS of RMB 1.39, 1.98 and 2.68, and the current stock price corresponding to PE of 20222024 to be 27.50x/19.23x/14.23x respectively, maintaining the “buy” rating.
Risk tips
1) the global IOT chip supply and demand gap continues to affect the stability of the supply chain in the short term; 2) The improvement of pen penetration of Qualcomm SOC scheme affects the demand of cellular modules; 3) The demand for downstream Internet of vehicles and 5g modules was lower than expected.
