\u3000\u30 Chongqing Baiya Sanitary Products Co.Ltd(003006) 38 Fibocom Wireless Inc(300638) )
Announcement summary: the company released its annual report for 2021, realizing an operating revenue of 4.109 billion yuan, a year-on-year increase of 49.87%, and a net profit attributable to shareholders of listed companies of 401 million yuan, a year-on-year increase of 41.51%. After deducting non recurring profits and losses, the net profit attributable to shareholders of listed companies of 373 million yuan, a year-on-year increase of 42.72%.
The performance was basically in line with expectations, and the ability of cost control was improved. The company’s Q4 single quarter revenue was 1.256 billion yuan, a year-on-year increase of 61.82% and a month on month increase of 21.71%, a record high. The net profit attributable to the parent company was 781460 million yuan, a year-on-year increase of 30.51%. The company’s annual performance was mainly driven by the continuous and rapid growth of PC and POS module shipments, and new products such as vehicle modules and gateways also showed a high growth trend. In 21 years, the sales volume of wireless communication modules reached 347556 million, a year-on-year increase of 36.75% and ASP increased by 3.87%. According to counter point data, the share of 21q3 Fibocom Wireless Inc(300638) revenue rose to 9.6%, ranking second in the world. In terms of sub regions, the company actively expanded its marketing channels. With the rapid development of the Internet of things industry and the strengthening of the company’s development efforts, the Chinese business continued to grow. In 21 years, the Chinese business revenue increased by 98.16% year-on-year to 1.731 billion yuan, accounting for 42.12% of the total revenue, and the overseas revenue was 2.379 billion yuan, a year-on-year increase of 27.19%. In terms of profitability, the company’s annual gross profit margin was 24.10%, with a year-on-year decrease of 4.21 PCT, which was mainly affected by the price rise of upstream raw materials, exchange rate fluctuation and product structure adjustment. The net profit margin was 9.77%, with a year-on-year decrease of 0.57 PCT, less than the gross profit margin. Thanks to the company’s refined management, the cost rate during the 21 years was 16.07%, with a year-on-year decrease of 2.3 PCT, of which the sales / management / R & D / financial cost rate was 3.21% / 2.09% / 10.44% / 0.32% respectively, Year on year decrease of 0.48/0.88/0.04/0.90pct respectively. It is expected that the overall operation will continue to improve with the easing of the shortage of upstream raw material supply and the improvement of the company’s supply chain management ability.
Several modules have obtained important certification and continue to increase R & D investment. In terms of 5g modules, during the reporting period, the company’s products fm150-ae and fg150-ae completed the certification of German Telecom and Vodafone, the world’s second-largest mobile telecom operator, fg360-na completed the certification of FCC and important operators in North America, and fg360-eua passed CE and GCF certification, accelerating the large-scale commercial use of FWA in Eurasia and the Middle East; An958-ae, a vehicle specification level module, has been certified by CCC, SRRC and nal, accelerating the upgrading of vehicle front mounted module business to 5g; In January 2022, it was announced that the 5gsub6ghz module fm160-cn supporting 3GPP release16 feature has entered the engineering sample submission stage, becoming the first 3GPP release16 industrial module customized for China. In terms of LTE modules, ltecat1 module l610-eu has been certified by Germany Telecom, Vodafone and Spain Telecom in Europe, LTE-A module fg621 has been certified by Asia Pacific, Europe, Latin America and other important places, and LTE high-speed series module nl952 has passed the T-Mobile certification of North American operators, accelerating the globalization of the company’s products. The company continued to increase its R & D efforts. In the past 21 years, the R & D investment was 456 million yuan, with a year-on-year increase of 49.58%, accounting for 11.09% of revenue. There were 1027 R & D personnel, accounting for more than 60%. Most of them had many years of industry R & D experience. Through active exchanges and cooperation with Intel, Qualcomm, Ziguang zhanrui, MTK and other companies, they explored technologies such as communication protocol stack software development, RF calibration control, integrated product development and design, interface expansion and integrated application, 27 new invention patents, 8 utility model patents and 19 software copyrights have been obtained.
Card position PC / POS track, vehicle module business to build a new growth curve. According to the announcement, PC customers include leading manufacturers such as Hewlett Packard and Dell, accounting for about 50% of the market. IDC data shows that the total shipment of PCs in 2021 reached 349 million units, with a year-on-year increase of 14.8%. The built-in penetration rate of cellular modules is low. SA data shows that it was only 4.5% in 2020, and it is mainly enterprise oriented and education oriented. It is expected that with the increase of remote office education scene, the demand will be expanded, the hardware cost will decline, the traffic will speed up and the fee will be reduced, Some PC manufacturers focusing on the C-end consumer market will try to build in cellular communication modules, and the penetration rate of PC market is expected to increase. The penetration of the Internet of vehicles is accelerated and the demand for vehicle modules is expanded. Through the establishment of subsidiaries Guangtong Yuanchi and the acquisition of Ruiling wireless, the company has respectively arranged the vehicle market at home and abroad, formed business collaboration and improved the market share of segments. Guangtong Yuanchi has covered Geely, Byd Company Limited(002594) , Chang’an, great wall and other mainstream independent brand car enterprises, continued to expand new forces in car manufacturing, and achieved a revenue of 398 million in 21 years. Ruiling wireless had a revenue of 1.53 billion yuan and a net profit of 381177 million yuan from January to August of the 21st year. It has stable cooperation with lgelectronics, Marelli, Panasonic and other international well-known first-class auto parts suppliers. Its main end customers include Volkswagen, Peugeot Citroen and other global well-known vehicle manufacturers. According to zoth automotive research, its market share of on-board wireless communication modules reached 19.1% in 2020. At present, it mainly ships 4G products and focuses on 5g, It is expected to start mass production and shipment gradually in 2023. According to the company’s announcement, at present, the acquisition of the remaining 51% equity of Ruiling wireless is temporarily suspended due to the expiration of the financial data. It is conducting additional audit and updating the data with relevant institutions, which is not expected to have a material impact on the acquisition of the company. In addition, the company seized the demand for 4G to 5g switching in the gateway overseas market and made a breakthrough during the reporting period. It is expected that the vehicle and CPE business will become a new growth point of the company’s future performance.
Investment suggestion: Fibocom Wireless Inc(300638) is the world’s leading provider of Internet of things communication solutions, with strong competitiveness in technology and market. With the 5g application, the penetration rate of cellular modules is expected to further improve. We believe that the company will maintain a dominant position in the laptop module market, and the expansion of the vehicle module market will help the company’s performance growth. Considering the performance increment brought by the consolidation of Ruiling wireless, we expect the net profit of the company from 2022 to 2024 to be 596 million / 800 million / 1022 million, and the EPS to be 1.44 yuan / 1.93 yuan / 2.47 yuan respectively, maintaining the “buy” investment rating.
Risk warning: industry competition intensifies the risk; Chip supply risks arising from overseas trade disputes; The risk of unsuccessful acquisition and integration; Foreign exchange fluctuation risk; Risk of shareholder reduction
