\u3000\u3 Shengda Resources Co.Ltd(000603) 236 Quectel Wireless Solutions Co.Ltd(603236) )
1. The business volume of communication modules increased and overseas sales increased rapidly: the company issued the annual report of 2021. During the reporting period, the company achieved an operating revenue of 11.262 billion yuan, an increase of 84.45% over the same period of last year; The net profit attributable to the shareholders of the listed company was 358 million yuan, an increase of 89.43% over the same period last year.
2. The downstream demand continues to be strong and the business income continues to improve: the growth of the company’s revenue is mainly due to the improvement of the business volume of LTE module, lpwa module, vehicle module and 5g module. The sales revenue of downstream fields in vehicle, intelligent security, gateway, wireless payment, laptop and other fields has increased significantly. In addition, the company’s export sales are growing rapidly and its internationalization strategy is advancing steadily. With the accumulation of new product development in recent years, perfect supply chain system and quality and quantity delivery ability, the company’s overseas business has grown rapidly. In 2021, the company’s overseas operating revenue was 4.97 billion yuan, a year-on-year increase of 113.27%.
3. Expenses: the overall three rates are stable, the R & D investment continues to increase, and the product matrix continues to expand: the company has set up the sixth R & D center in Guilin. In 2021, the R & D investment reached 1.022 billion yuan, accounting for 9.08% of the operating revenue, with a year-on-year increase of 44.62%. During the reporting period, the company set up a new R & D center in Guilin. In addition, the company continued to enrich the product matrix and consolidate its advantages in the field of 5g modules and vehicle modules. At the same time, it launched a series of module products supporting AI algorithm and the first lpwa module based on SIP packaging, ultra-low power consumption and ultra-small size, catering to the wearable and small tracker market. In addition, in cat 4. Breakthroughs have been made in high-speed dual band WiFi, GNSS and other fields.
4. The operating cash outflow continued to increase and is still in the stage of continuous input and output: the net cash flow from operating activities in this period increased by 89.56 million yuan compared with the net outflow in the previous period, which is mainly due to the increase of cash expenditure due to the expansion of the company’s overseas business and personnel scale, the increase of R & D investment, the increase of raw material preparation, the increase of daily production and operation office expenses and the increase of employee compensation.
5. Enrich the module product portfolio, achieve initial results in the layout of new products, and establish the benchmark of the module industry: the company has launched the second generation 5gnr communication module, vehicle specification module and high positioning module, as well as a series of module products supporting AI algorithm, as well as the first lpwa module with ultra-low power consumption and ultra-small size based on SIP packaging. While maintaining the high-speed development of the existing module business, actively layout antenna products, queicloud Internet of things cloud platform, ODM, smart city digital integration and other new businesses.
6. Investment suggestion: as the developer of Internet of things (IOT) technology and the leading manufacturer of wireless communication module, the company continues to expand downstream application fields such as Internet of vehicles and notebook module, bringing new development. With the advent of the era of Internet of things, the Internet of things module is expected to usher in rapid growth. Slightly adjust the profit forecast. It is expected that the company’s revenue will increase from RMB 11.167/14.572/n/a billion to RMB 16.969/24.757/34.641 billion from 2022 to 2024, and the earnings per share will be adjusted from RMB 3.97/5.79/n/a to RMB 3.33/4.63/7.10 respectively, corresponding to the closing price of RMB 145.05/share on April 19, 2022, and the PE will be 43.55/31.34/20.43 times respectively, maintaining the “overweight” rating.
7. Risk warning: market competition risk of Internet of things industry; Foreign exchange fluctuation risk; The trade friction between China and the United States leads to the risk of shortage of upstream raw materials or rising procurement costs; Systemic risk.
