\u3000\u3 Guocheng Mining Co.Ltd(000688) 311 Chengdu M&S Electronics Technology Co.Ltd(688311) )
Key investment points
The company issued an equity incentive plan to clarify future growth expectations. The company announced on April 6, 2022 that it plans to grant 1249000 shares to 68 incentive objects. It accounted for 1.09% of the total share capital of the company at the time of the announcement of the draft incentive plan, and the grant price of restricted shares in the incentive plan was 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%. The performance assessment requirements of the equity incentive plan clarify the growth expectation of the company in the next three years.
The company has become one of the main suppliers of China Spacesat Co.Ltd(600118) navigation terminal and satellite communication terminal. In the field of satellite navigation, the company is one of the few manufacturers in China who independently master the core technologies such as navigation antenna, microwave frequency conversion, signal and information processing. The company has the national production design capability, can develop satellite navigation receiving terminals, also has the design capability of analog satellite signals, and develop various satellite navigation simulation test equipment. In the field of satellite communication, the company has mastered the core technologies of antenna feeder design, RF and microwave, transmission structure and mechanical simulation analysis, inertial navigation and servo tracking. The company’s main customers are scientific research institutes subordinate to major military industrial groups such as aerospace, aviation and electronics.
The company’s satellite navigation products are mainly used in the field of national defense and military affairs. In recent years, the company has participated in the development of several equipment models, and many products have been finalized and entered the stage of mass production. The company has successfully developed missile borne navigation data link integrated terminal products and applied them to the national defense weapon platform, realizing the first breakthrough of private enterprises in this field. Satellite navigation and data link terminal are the core components to improve missile accuracy and weapon intelligence. They are in line with the development trend of modern war and the key construction direction of our army’s weapon and equipment modernization.
The company’s satellite communication products are mainly used in maritime, civil aviation market and national defense and military fields. The company’s satellite mobile communication products cover the mainstream frequency bands of satellite communication at present, forming various series products on board, ship and vehicle, and supporting various satellite communication systems such as maritime communication, Tiantong system and VSAT system. In addition to the military field, the company’s airborne satellite communication system has been recognized by foreign customers.
Investment suggestion: give “buy” investment rating for the first time. The company is one of the main suppliers of China Spacesat Co.Ltd(600118) navigation and satellite communication terminals. The supporting models of products have entered the stage of batch loading, and the products meet the needs of modern military struggle. The performance guidelines of the equity incentive plan clarify the market’s expectations for the company’s future performance growth. We believe that the company is expected to usher in a new period of development in the future. We estimate that the EPS of the company in 2021, 2022 and 2023 will be 1.22, 1.73 and 2.38 yuan respectively, and the corresponding PE will be 50.9, 35.9 and 26.1 times respectively. The “buy” investment rating was given for the first time.
Risk tips: 1. The development of new business is not as expected. 2. The epidemic affects the stability of the supply chain and the demand of downstream customers.
