\u3000\u30 Guangdong Tengen Industrial Group Co.Ltd(003003) 94 Suzhou Tfc Optical Communication Co.Ltd(300394) )
Key investment points
Company announcement: the company released the annual report of 2021 and achieved a total operating revenue of 1.032 billion yuan, a year-on-year increase of 18.2%; The net profit attributable to shareholders of listed companies was 306 million yuan, a year-on-year increase of 9.77%; After deducting non recurring profits and losses, the net profit attributable to shareholders of listed companies was 277 million yuan, a year-on-year increase of 6.13%. EPS is 0.79 yuan / share. The net cash flow from operating activities was 370 million yuan, a year-on-year increase of 54.36%.
The performance was in line with expectations, and overseas revenue maintained a high growth rate. Under the influence of factors such as the cyclical fluctuation of 5g construction in China and the epidemic situation, the company still achieved double growth of revenue and profit, and its performance showed strong toughness. In terms of business, the revenue of optical passive devices was 920 million yuan, a year-on-year increase of 23.74%. The revenue of optical active devices was 85 million yuan, a year-on-year decrease of 27.06%. The decline of optical active device business was mainly affected by the fluctuation of 5g construction in China. Meanwhile, lidar continued to make progress and other businesses doubled. In terms of market, the Chinese market achieved a revenue of 512 million yuan, a year-on-year decrease of 7.3%, and the overseas business revenue was 521 million yuan, a year-on-year increase of 62.02%. In terms of gross profit margin, the annual gross profit margin was 49.68%, which was mainly affected by the price rise of upstream materials and the adjustment of product structure. In terms of expenses, the financial expense ratio of the company's sales management was 1.43% / 6.59% / - 0.43% respectively, with a year-on-year increase of + 0.29 / + 0.55 / - 1.29 PCT respectively. As a global leader in optical devices, the company adheres to the medium and high-end market positioning and the concept of high-quality products, and gradually transforms to an overall solution provider. The company's overseas market has achieved continuous high growth. It has successively set up subsidiaries in Japan, the United States and other places. At the same time, it plans to set up overseas sales headquarters in Singapore to form a three-dimensional global sales technical support network with division of labor and cooperation, so as to improve the local service capacity and corresponding speed of key customers. In addition, the company plans to set up a production base in Southeast Asia to enhance its core competitiveness in the global market.
The demand for digital communication continues to improve, and the optical engine has entered the stage of mass production. Under the catalysis of digital economy, meta universe and other factors, the demand for optical devices in the digital communication market continues to grow. We expect the scale construction of global data center to drive the continuous large-scale production of 400g / 200g and other high-speed optical modules. According to lightcounting data, the sales of optical modules in Q1-Q4 global data centers in 2021 were $10.59/11.96/12.99/1.449 billion respectively, with a year-on-year increase of + 29% / + 8% / + 26% / + 46%, of which the sales of Ethernet optical modules reached a new high. The company is the core supplier of upstream optical devices of digital communication optical modules in the world, which fully benefits from the growth of the industry and the market share of products continues to increase. The company merged Tianfu precision and Arctic optoelectronics successively in 2020, increasing the value of the company's single product. The production capacity of the company's new Jiangxi production base is released in an orderly manner, which can effectively alleviate the cost side pressure of Arctic optoelectronics production in Shenzhen, improve the company's comprehensive gross profit margin, release the production capacity of glass cold processing and WDM passive components, and is expected to strengthen the standardized management of production links. The high-speed optical engine construction project of the raised investment project entered batch delivery in 2021q3, and will be mainly used for 400g / 800g and higher rate data communication optical modules. The mass production of high-speed optical engine helps the company realize vertical extension and integration in business, improve the unit value of the company in the optical module, and meet the long-term trend in technology. The continuous volume of business is expected to open the space for long-term growth.
Maintain high R & D investment and make continuous progress in lidar. With R & D as the fundamental development concept, the company invested 100 million yuan in R & D throughout the year, with a year-on-year increase of 28.94%, accounting for 9.65% of the current revenue. Through continuous high R & D investment, the company has built the core technical capability of products, extended to non communication fields such as lidar, and cultivated new performance growth points. The market prospect of lidar is broad. According to Frost & Sullivan's prediction, the market scale of lidar in the field of advanced driving assistance system in the world will increase from 120 million US dollars in 2019 to 4.61 billion US dollars in 2025, with a compound growth rate of 83.7%. At present, more than 20 vehicle models released / mass produced in the world have been determined to be equipped with lidar, and the on-board lidar market is in the early stage of mass production. Relying on the existing mature optical device R & D platform and the team's deep technology and process accumulation in basic materials and components, optical design, integrated packaging and other fields, the company can customize and provide optical device products that meet various performance requirements for lidar manufacturers. At the same time, the company has set up a special sales team and project team to continuously follow up, and has the ability of rapid scale and quantity delivery. At present, due to different technical routes, lidar manufacturers have different product forms and technical indicators for optical devices. The company has provided small batch product delivery for some lidar manufacturers. In the future, the company will increase the research and development of supporting devices and strive to provide products and services for more mainstream lidar manufacturers.
Investment suggestion: the company is a leading service provider of China's optical device integration platform system, and continues to expand its product line through endogenous extension. With the release of the demand for high-end optical modules in the downstream data center, the company's passive business has grown strongly, the optical engine has entered the state of batch delivery, and the source business is ready to go. The progress of new business lidar and medical testing is good, which is expected to break the growth ceiling of the company. Considering the fluctuation of 5g cycle construction and the progress of the company's new business, we adjusted the profit forecast. It is estimated that the company's net profit from 2022 to 2024 will be 392 million yuan / 490 million yuan / 600 million yuan (the original forecast of 416 million yuan / 551 million yuan from 2022 to 2023), and EPS will be 1 yuan / 1.25 yuan / 1.53 yuan respectively, maintaining the buy rating.
Risk warning: the market demand for 5g construction and digital communication is lower than expected; The new product line is put into operation less than expected risk.
