\u3000\u30 Chongqing Baiya Sanitary Products Co.Ltd(003006) 38 Fibocom Wireless Inc(300638) )
[key points of investment]
The company released the 2021 annual report. The annual operating revenue was 4.109 billion yuan, with a year-on-year increase of 49.78%, which was in line with the previous expectation. The net profit attributable to the parent was 401 million yuan, with a year-on-year increase of 41.51%, and the net profit deducted from non attributable to the parent was 373 million yuan, with a year-on-year increase of 42.72%, slightly lower than the previous expectation.
The revenue of module products continues to increase, and it is expected to continue the rising trend of both volume and price in the future. Benefiting from the high prosperity of the Internet of things and the company’s good business strategy, the company’s main business wireless communication module product revenue was 3.822 billion yuan, a year-on-year increase of 42.03%, accounting for 93% of the total revenue. In terms of profitability, it is mainly affected by the price rise of upstream raw materials. The company’s comprehensive gross profit margin in 2021 was 24.45%, down 3.97pct year-on-year. Thanks to the company’s excellent cost control ability, the company’s net sales profit margin fell only 0.57pct to 9.77% last year, which is still at the leading level in the industry. Although the gross profit margin decreased significantly, thanks to the iterative upgrading of products, the average sales unit price of the company’s modules in 2021 was about 110 yuan, an increase of about 4 yuan year-on-year. We believe that with the gradual withdrawal of 2G and 3G networks worldwide and the restoration of 5g network construction, the volume of CAT1 and 5g modules is expected to drive the company’s sales to continue to show the trend of both volume and price.
Cash flow is under pressure, increase inventory and ensure the safety of the supply chain. Affected by the epidemic, the upstream supply was tight. The company adjusted its business strategy and prepared large-scale goods and materials in advance to meet the strong demand of the downstream. By the end of last year, the company’s inventory was 807 million yuan, a year-on-year increase of about 57.14%. In addition, the company’s accounts receivable increased significantly. By the end of last year, the company’s accounts receivable had reached 1.122 billion yuan, a year-on-year increase of 72.35%. The above factors led to the company’s net cash outflow from operating activities of 420 million yuan in 2021, a new low over the years. The company’s historical cash flow from operating activities has performed well for a long time. We believe that the company’s cash flow will return to normal with the gradual recovery of upstream supply and the collection of customers.
The product layout and comprehensive strength of the business end have been comprehensively improved. In 2021, the company made phased progress in product layout and business expansion, mainly including: 1) released a number of Nb IOT, 4G and 5g products, which can be widely used in Pan IOT, laptop, sharing economy, mobile payment, industrial interconnection, vehicle and other application scenarios, so as to better meet the different needs of different customers. 2) New progress has been made in product certification. 5g and new CAT1 modules have successfully completed the certification of Deutsche Telekom, Vodafone and other institutions, obtained the “pass” of key markets, and the vehicle gauge 5g module has obtained three important certifications in China, which will accelerate the upgrading of the company’s vehicle front module business from 4G to 5g and enhance the value of single vehicles. 3) The company strengthened technical exchanges and cooperation with downstream partners, launched wireless communication solutions suitable for a variety of IOT terminals, and promoted the company’s wide application in many downstream fields. 4) Increase market expansion, strengthen the construction of marketing team, actively expand marketing channels and expand agency channels, and further promote the company’s products to the market.
The Internet of things is showing a rapid development trend in the world, and the company ranks first in the global share. According to the statistics and prediction of IOT analytics, the number of IOT devices connected worldwide will increase by 9% in 2021, reaching 12.3 billion active terminals, and there are now more than 2 billion cellular IOT devices; It is estimated that by 2025, the number of Internet of things connections will exceed 27 billion. As the core component of the Internet of things equipment cellular networking, the company’s main product cellular wireless communication module has a broad market prospect and its market share is at the forefront of the world. According to the statistics of global shipments of cellular Internet of things modules in the third quarter of last year by counterpoint, the market share of the company and Ruiling wireless acquired by the company reached 9.6% and 2.3% respectively, ranking the second and ninth in the world, highlighting the company’s market competitiveness. [investment suggestions]
The company is mainly engaged in the design, R & D and sales service of communication solutions in wireless communication module and its application industry. Its products are widely used in the fields of notebook computer, mobile payment, Internet of vehicles, smart grid, security monitoring, smart home, smart city and other Internet of things, and its market share ranks among the top in the world.
Considering the company’s performance, competitiveness and industry prosperity, we raised the revenue forecast for 20222023, lowered the cost rate forecast for the period, and lowered the gross profit margin forecast, so as to raise the profit forecast for 20222023 and add the profit forecast for 2024. Without considering the consolidated statement of Ruiling wireless, the company’s operating revenue from 2022 to 2024 is expected to be 5.64 billion yuan, 7.31 billion yuan and 9.239 billion yuan, the net profit attributable to the parent company is 565 million yuan, 756 million yuan and 984 million yuan, and the EPS is 136 million yuan, 182 million yuan and 238 yuan, corresponding to 28 times, 21 times and 16 times of PE. We are optimistic about the company’s future performance and maintain the “buy” rating.
[risk tips]
The prosperity of the Internet of things industry is lower than expected;
The penetration improvement process of the Internet of vehicles is less than expected;
The upstream continues to rise in price and out of stock;
Market competition intensifies.
