\u3000\u3 Shengda Resources Co.Ltd(000603) 236 Quectel Wireless Solutions Co.Ltd(603236) )
[key points of investment]
The company released the 2021 annual report. The annual operating revenue was RMB 11.262 billion, with a year-on-year increase of 84.45%, the net profit attributable to the parent was RMB 358 million, with a year-on-year increase of 89.43%, and the net profit deducted from non attributable to the parent was RMB 335 million, with a year-on-year increase of 97.18%, which was in line with the previous expectation.
Revenue increased significantly, and the internationalization strategy was steadily promoted. The company's main business is the design, R & D, production and sales services of wireless communication modules and their solutions in the field of Internet of things. It can provide one-stop solutions including wireless communication modules, antennas and cloud platform management of Internet of things. In 2021, the company's sales revenue in vehicle, intelligent security, gateway, wireless payment, laptop and other downstream fields increased significantly, and the business volume of LTE module, lpwa module, vehicle module and 5g module increased significantly. The revenue of its main "module + antenna" products reached 11.134 billion yuan, a year-on-year increase of 91.48%. In terms of regions, with the accumulation of new product development in recent years, perfect supply chain system and quality and quantity delivery capacity, the company's overseas business has grown rapidly and the internationalization strategy has been steadily promoted. In 2021, the company's overseas operating revenue was 4.97 billion yuan, a year-on-year increase of 113.27%; The domestic operating revenue was 6.292 billion yuan, a year-on-year increase of 66.66%.
Gross profit margin and cash flow are under pressure, and the period expense rate has improved significantly. Due to the overall shortage of industrial raw materials, the company's procurement cost increased in 2021. The company adheres to the principle of serving and supporting customers first, and the cost increase takes a long time to be transmitted to downstream customers. Therefore, the gross profit margin decreased by 2.67pct to 17.56% year-on-year. In order to ensure the safety of the supply chain, the company increased the inventory level. By the end of 2021, the company's inventory was 2.699 billion yuan, an increase of 87.65% year-on-year, As a result, the net outflow of cash flow from operating activities last year was 488 million yuan, which continued to remain under pressure. Thanks to the embodiment of large-scale advantages, the cost rate of the company has been significantly improved during 2021. The total cost rate of management, sales, R & D and finance is 14.5%, a year-on-year decrease of 2.7pct, which plays a key role in improving the profitability of the company.
Attach importance to technology R & D and product innovation, and the company has a large R & D team. In 2021, the company set up a R & D center in Guilin, which further improved the company's overall technology R & D, product innovation and patent invention innovation ability, and provided localization support for customers and projects in South China. At present, the company has six R & D centers in Shanghai, Hefei, Foshan, Guilin, Belgrade and Vancouver, covering China, Europe, North America and other regions, providing strong support for the rapid development of globalization. In 2021, the R & D investment of the company reached 1.022 billion yuan, accounting for 9.08% of the operating revenue, with a year-on-year increase of 44.62%. By the end of the reporting period, the company had 2997 R & D personnel, accounting for 72.97%. The scale of R & D personnel was significantly higher than that of Companies in the same industry, ensuring the continuous leadership of the company's R & D strength.
The vehicle business has achieved remarkable results, and the non module business has achieved initial results. During the reporting period, the company launched a number of new vehicle module products, forming a diversified product system, meeting the increasingly rich customer needs of the Internet of vehicles ecosystem, and won a number of heavyweight awards and certifications, highlighting the company's leading strength in the field of vehicle. At present, the company has formed cooperation with many vehicle primary suppliers and main engine manufacturers in Japan, South Korea, India, Vietnam, Italy, Germany, France, Spain, Sweden, the United States and other countries, and the number of fixed-point projects continues to increase, laying a solid foundation for the company to become the leader of enabling intelligent interconnected vehicles. In addition, based on the module business with large-scale advantages, the company's antenna, Internet of things cloud platform, ODM and other businesses have also achieved initial results.
The leading position of the company is stable, with rapid growth from January to February. At the end of March, the company announced the operating data from January to February this year, achieving a revenue of about 1.9 billion yuan, a year-on-year increase of 68%, and a net profit attributable to the parent of about 66.6 million yuan, a year-on-year increase of 50%, continuing the trend of rapid growth. The high prosperity of the Internet of things industry continues. According to the statistics and forecast data of abiresearch 2021q3 quoted by the company, the number of global Internet of things connections will reach 23.1 billion in 2026, with a compound growth rate of about 20% from 2021 to 2026. In addition, the rapid penetration of new energy vehicles has promoted the rapid development of vehicle networking applications, and there is a strong demand for on-board communication modules. On the other hand, with the gradual withdrawal of 2G and 3G networks and the restoration of 5g networks worldwide, Nb IOT and ltecat 1. 5g will become the mainstream Internet of things cellular communication technology. Under the technical iteration, the product unit price will increase to a certain extent. It can be seen that the Internet of things module industry is in a new cycle of simultaneous increase in volume and price. According to the latest statistics of abiresearch in 2022, the company's share of the global cellular module market reached 38% in 2021, ranking the first. As the leader of the global Internet of things cellular module, we expect the company's performance to achieve sustained and rapid growth in the industry's volume and price rise cycle in the future.
[investment suggestions]
With comprehensive reference to the company's industry status, competitiveness, historical performance and industry prosperity, compared with the previous forecast, we raised the revenue forecast for 20222023 and lowered the forecast of gross profit rate and period expense rate. Therefore, we lowered the profit forecast and added the performance forecast for 2024. It is estimated that the operating revenue from 2022 to 2024 will be 16.724 billion yuan, 22.979 billion yuan and 30.493 billion yuan, the net profit attributable to the parent company will be 555 million yuan, 790 million yuan and 1.071 billion yuan, the EPS will be 382 million yuan, 543 million yuan and 7.37 yuan, and the corresponding PE will be 38 times, 27 times and 20 times. We are cautious about the future performance of the company and maintain the "overweight" rating.
[risk tips]
The growth of Internet of things connections is less than expected;
The upstream supply is tight and the price of raw materials is high;
Market competition intensifies.
