\u3000\u3 Guocheng Mining Co.Ltd(000688) 636 Chengdu Zhimingda Electronics Co.Ltd(688636) )
Overview: military embedded computer is the core of national defense informatization
Military embedded computer is a special computer used in weapons and equipment, which has strict requirements for function, volume, reliability and security. It is the brain of modern military system and plays a core supporting role in information war. According to the weapon platform, it can be divided into missile borne, airborne, vehicle borne and shipborne embedded computers. At present, China's industry structure is relatively scattered, and the industrial chain has the national industrialization capacity.
Industry: large market space in airborne field and good growth in missile borne field
In the field of airborne, avionics system accounts for nearly half of the value of the whole military aircraft. Benefiting from the large volume of main combat aircraft and the increase in the value proportion of avionics system, it is expected to maintain a growth rate of about 30% every year; In the missile borne field, at least 2-3 embedded computer boards are required for a missile, and the value of a single board is about 100000 yuan. Benefiting from the large-scale volume of the main battle missile and the improvement of the penetration rate of precision guidance, it is expected to maintain a growth rate of more than 50% every year; In the field of vehicle and shipborne, it mainly benefits from the Informatization Transformation of weapon platforms, which is expected to maintain a natural growth of 10-15% every year. We conservatively estimate that the annual market space of military embedded computers equipped with main battle equipment alone exceeds 10 billion, up to 100 billion.
Company recommendation logic 1: significant airborne advantages, explosive missile borne demand, and basically stable performance
The company's airborne embedded computers are mainly used in fire control / photoelectric radar, communication equipment, electronic countermeasures, instruments and meters of military aircraft, with more than 60% of revenue, full understanding of the industry, more than 10 years of customer cooperation, and up to 50 or 60 non consolidated caliber; The company's missile borne embedded computer products are mainly used for seeker and flight control system. They have entered the batch production stage since 2018. At present, the proportion of revenue has rapidly increased to about 20%. As more and more research projects are converted into batch production orders, the company's missile borne products will enter the accelerated mass production stage.
Company recommendation logic 2: platform management, modular research and development, and continuous transformation of pre research projects
The management of the company has solid technical background, rich management experience and equity incentive in place. After more than 20 years of precipitation, a platform-based R & D system and management mode led by the chief engineer's office and performed by the project department have been established, with a R & D team of more than 200 people. By the end of 2021, the company had added 167 new projects, an increase of 45% over the same period of the previous year. The modular R & D process based on the technology platform significantly reduced the time and personnel cost of new project development, and improved the success rate of converting them into batch production orders.
Investment advice
In the short term, the company is optimistic about the large volume of airborne and missile borne fields, and in the medium and long term, the company is optimistic about the forward-looking layout of ADC analog chips, and seek the long-term second growth curve while cooperating with the main business. It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be 111 million yuan, 156 million yuan and 232 million yuan respectively, corresponding to EPS of 221 million yuan, 309 million yuan and 4.60 yuan, and the current share price corresponding to PE from 2021 to 2023 will be 39.05x/27.92x/18.78x respectively. For the first time, give a "buy" rating.
Risk tips
1) national defense informatization construction is not as expected; 2) R & D transformation is less than expected; 3) The military review pricing was lower than expected.
