\u3000\u30 Guangdong Tengen Industrial Group Co.Ltd(003003) 94 Suzhou Tfc Optical Communication Co.Ltd(300394) )
Event overview: on April 18, 2022, the company released its annual report for 2021. In 2021, the company realized an operating revenue of 1.032 billion yuan, a year-on-year increase of 18.20%, a net profit attributable to the parent company of 306 million yuan, a year-on-year increase of 9.77%, and a net profit deducted from non attributable to the parent company of 277 million yuan, a year-on-year increase of 6.13%. In a single quarter, 21q4 achieved an operating revenue of 266 million yuan, a year-on-year increase of 22.95%, a month on month decrease of 3.52%, and a net profit attributable to the parent company of 93 million yuan, a year-on-year increase of 44.51% and a month on month increase of 24.32%.
Not afraid of the demand fluctuation of the telecom market, the demand of the digital communication market provides strong support for the performance: in 2021, the telecom market was subject to the fluctuation of China’s 5g base station construction process, and the channels were mainly de stocking, resulting in a year-on-year decrease of 27.06% in the company’s active device business revenue. In this context, the company still achieved an increase of 18.20% and 9.77% in revenue and net profit attributable to the parent company in 2021, which is mainly due to the increase in the demand for optical device products driven by the company’s active development of advantageous customers at home and abroad and the scale construction of global data center. On this basis, the company’s high-speed optical engine successfully achieved mass production. The acquisition of Arctic optoelectronics and Tianfu precision in 2020 also contributed to the growth of revenue and profit.
The scene of digital communication market is high, and the company has achieved remarkable results in accelerating overseas layout: the demand of digital communication market is the main driving force for the company’s performance growth in 2021. From the industry level, the demand of digital communication market has continued to rise since the second quarter of last year. With the announcement of entering the cloud universe by meta and Microsoft in 2021, the cloud giants are expected to open a new round of capital expenditure competition on the infrastructure side, which is expected to drive the overall demand of upstream optical device products. At the company level, in order to better respond to the needs of overseas digital communication customers, the company has continued to deepen the global layout of its business in recent years. At the R & D level, the R & D strength of Japan and the United States continued to grow. In terms of production capacity, further seek the complementary advantages of foreign regions and establish production bases in Southeast Asia. At the sales level, a global network of sales branches has been formed in the United States, Hong Kong, Shenzhen and Wuhan. At present, the overseas layout has achieved remarkable results. The company’s export revenue has increased by 62.02% year-on-year, and the proportion of revenue has increased from 36.78% in 2020 to 50.42% in 2021.
The emerging business is accelerating, and the high-speed optical engine business is making efforts to create the second growth curve: the high-speed optical engine integrates precision micro optical components, precision mechanical components, isolators, optical waveguide devices, etc. on the basis of high-speed transmitting chip and receiving chip packaging, so as to realize the function of single-channel or multi-channel parallel optical signal transmission and reception. With the downstream optical module industry gradually entering the era of 800g and silicon light, it will drive a large number of supporting needs of high-speed optical engines, which is expected to become the mainstream development direction of the industry in the future. The company has made rapid progress in high-speed optical engine business. It can provide optical engine products supporting 400g / 800g optical modules. At present, it has been transferred from small batch to mass production. Driven by the high growth demand in the downstream data communication field in the future, it is expected to create a second growth curve for the company.
Investment suggestion: we expect the net profit attributable to the parent company from 2022 to 2024 to be RMB 425 / 545 / 682 million respectively, and the corresponding PE multiple is 22x / 17x / 13X. As a scarce one-stop solution provider of platform optical devices in China, the company has strong traditional passive business strength, obvious synergy between active business and passive device business, and prominent platform attribute. With the large-scale mass production of high-speed optical engine project and the accelerated promotion of cross domain emerging business, it is expected to open up future growth space for the company. Maintain a “recommended” rating.
Risk tip: the market demand of traditional telecom / digital communication is less than expected, and the expansion of new application fields is less than expected
