\u3000\u3 Guocheng Mining Co.Ltd(000688) 311 Chengdu M&S Electronics Technology Co.Ltd(688311) )
Event: the company announced on April 6 that it plans to grant 1249000 restricted shares to 68 incentive objects, accounting for 1.09% of the total share capital of the company at the time of announcement of the draft incentive plan. The grant price of restricted shares in the incentive plan is 23.28 yuan per share. The performance assessment shall be based on the net profit in 2021, and the net profit growth rate from 2022 to 2024 shall not be less than 40%, 90% and 150%.
We have been deeply engaged in satellite navigation and communication for many years and have accumulated strong technology. The company’s traditional main business can be divided into satellite navigation products and satellite communication products. The company’s satellite navigation products are mainly terminal equipment and core component products based on Beidou satellite navigation system, such as satellite navigation receiver, navigation product components, special test equipment, etc. at present, they are mainly used in the field of national defense. Satellite communication products are mainly satellite communication antennas and components, including mobile communication antennas, beacons and tracking receivers. At present, they are mainly used in maritime and aviation markets.
The successful networking of beidou-3 will boost the demand for the company’s satellite navigation products: on June 23, 2020, the last beidou-3 satellite was successfully launched, marking the completion of networking of beidou-3 global satellite navigation system. Compared with beidou-2, the positioning accuracy of beidou-3 system is higher, the coverage is wider (global coverage) and more customers are served. The successful networking of navigation satellites often drives the demand for navigation terminal products. For example, after the networking of Beidou generation II system was completed in 2012, the performance of the industrial chain related to the development of Beidou navigation terminal equipment has increased significantly. We believe that after the completion of Beidou’s third-generation networking, it will play a stronger role in stimulating the demand for Beidou navigation terminals. In the future, the company’s satellite navigation products will have strong growth certainty and will become an important growth point of the company’s performance.
The active layout of electronic countermeasure business is expected to become a new growth point of performance: in the first half of 2021, the company took electronic countermeasure as the strategic development direction of the company’s business through industry development and market demand analysis, established electronic countermeasure business department, and increased resource investment in market development, technology development and talent introduction. Due to the high homology between the electronic countermeasure technology and the company’s existing technology, the company has a technical foundation in the electronic countermeasure business, and the market can be expected in the future. It is expected to further expand the company’s technical capability boundary and become a new growth point of the business.
Investment suggestion: the company released the equity incentive plan this time to demonstrate the company’s sufficient confidence in future development. Benefiting from the vigorous development of aerospace industry and the high scenery of military industry, the company is expected to usher in a period of rapid development in the future. We expect that the company’s revenue from 2021 to 2023 will be 480 million yuan, 700 million yuan and 990 million yuan respectively, and its net profit will be 140 million yuan, 200 million yuan and 290 million yuan respectively, with corresponding PE of 47x, 33x and 22x respectively, maintaining the investment rating of buy-a.
Risk warning: the market of satellite navigation and communication products is less than expected; The business progress of e-confrontation is less than expected.
