\u3000\u3 China Vanke Co.Ltd(000002) 281 Accelink Technologies Co.Ltd(002281) )
Event: the company released the annual report of 2021.
In 2021, the company achieved a revenue of 6.49 billion yuan, a year-on-year increase of 7.3%, and a net profit attributable to the parent company of 570 million yuan, a year-on-year increase of 16.4%. Among them, Q4 achieved a revenue of 1.76 billion yuan, an increase of 10.7% month on month, and a net profit attributable to the parent company of 110 million yuan, a decrease of 31.3% month on month. In terms of products, the revenue of transmission series was 3.85 billion yuan, a year-on-year increase of 12.1%, and the revenue of access and digital communication was 2.6 billion yuan, a year-on-year increase of 5.2%. On the whole, we believe that the performance of the company in 2021 is basically in line with expectations, and the decline in Q4 profit is mainly due to the increase of R & D expense ratio and the provision for inventory impairment.
The company’s overall market position is leading, with multiple product lines to smooth industry fluctuations.
According to omdia statistics, as of the third quarter of 2021, the company’s global optical device market share was 7.8%, an increase of 1PCT over the same period last year, ranking fourth in the world. Among them, the market share of transmission service increased to 2%, and the market share of data communication service increased by 1.1%. In 2021, China’s 5g investment decreased, the scale of 5g prequel market shrank, and the transmission market grew steadily, while 10gpon achieved rapid growth in the first year due to scale deployment. In terms of data communication, overseas 400g continued to increase in volume in the second half of the year, and the network upgrading of Chinese cloud and Internet manufacturers was also actively promoted. On the whole, the transmission product line of the company in 2021 may grow steadily due to the rapid growth of DCI white box and the domestic substitution of transmission devices / modules, with the growth rate increased by 7pct compared with that in 2020. The 5g forward transmission, GPON, 10gpon and digital general rules of the data and access part have changed one after another, and the overall growth rate is slower than that in 2020.
“Counting from the east to the west” will stimulate the investment in backbone networks and DCI, and the transmission sector 2022 is expected to continue to shine.
With the implementation of the investment plan of “counting from the east to the west”, the capital expenditure of the three major operators in 2022 is significantly inclined to the computing power network, and mobile and Telecom will invest 48 billion yuan and 27.9 billion yuan respectively in the computing power network and industrial digitization. The construction of computing power network will directly promote the expansion of backbone nodes of transmission network and the construction of data center Internet. Omdia predicts that the compound growth rate of global DCI in the next five years will be 5.4%, and the Chinese market will become the main driving force from 2022 to 2023. The company has MUX, OA, La, dge and other products. High end white boxes and devices achieved rapid growth last year. In addition, the company’s demand for optical passive products is in a relatively stable growth state. In the future, WSS, OTDR and other products serving all-optical networks will face higher growth opportunities, and the transmission module will also benefit from the iteration from 100g to 200g and 400g.
PON product line continues to be optimized like high-end products, with strong data communication orders and continuous production expansion.
With the continuous promotion of China’s Gigabit broadband construction and the development of new optical fiber infrastructure after the overseas epidemic, the global 10gpon market has ushered in a period of rapid development. Lightcounting predicts that the global FTTH Optical device market will reach US $1.6 billion in 2023, of which 10gpon series accounts for more than 70%, and the next generation of 25g / 50gpon products will also generate scale demand in 2025. The company is the core supplier of FTTH Optical devices in the world. The rapid growth of 10gpon series may offset the decline of traditional GPON / EPON products last year. In addition, the company realizes better cost advantages through self supplied DFB / EML optical chips, and the profit contribution of PON product line is expected to be stable in the future. In terms of digital communications, the company has become the top three mainstream suppliers in the Chinese market, including Flextronics, Samsung, Cisco, Google, etc. The company’s product line layout is at the forefront of the industry. In the future, the expansion of 400g / 800g new production capacity is expected to support the growth rate of digital communication business, which will continue to be higher than the overall average level of the company.
The company issued a fixed growth plan, which shows that the company’s medium and long-term product iteration path is clear and the revenue growth is clear.
The 2022 fixed growth plan previously released by the company mainly invested in the expansion of high-end optical devices such as 5g / F5G, coherent devices, modules, advanced white boxes and high-speed data communication modules and the construction of high-end optoelectronic device R & D center. Among them, after the high-end device project is put into operation, it will form a scale with an annual output of 6.1 million 5g / F5G optical devices, 133500 coherent devices, modules and advanced white boxes, and 700000 digital communication modules. The output value is expected to increase by 3.45 billion yuan. We believe that the company’s DCI high-end white box system and module series and 400g / 800g digital communication series are expected to become important growth poles in the medium term, and the next generation 5g prequel and PON products will also be in the forefront of the industry. If it is assumed that the raised investment project will reach full production in 2024, the company’s revenue is expected to exceed 10 billion on the basis of its original business in 2021.
Investment advice
We believe that as the comprehensive leader of optical devices, the company will benefit from the construction of East digital West computing in the next few years, and the raised investment project has planned a clear growth path. In view of the high base effect and industry boom switching and other factors, we expect the company to realize the net profit attributable to the parent company of 670 million and 820 million yuan in 2022 and 2023 respectively (the previous value is 780 million and 960 million yuan), and add 970 million yuan to the profit forecast for 2024. The current share price corresponds to the price earnings ratio of 2022 / 2023, which is 17.1 / 14.0 times respectively, maintaining the “buy” rating.
Risk tips
The transmission network investment of operators is lower than expected, the market share of the company’s data center is lower than expected, the production capacity or quality problems of its own chips, and the Sino US science and technology trade friction affects the stability of the supply chain.
