\u3000\u3000 Fibocom Wireless Inc(300638) (300638)
5g module passed Vodafone certification and LTE module obtained CE / FCC important certification: according to the company’s official website, in November 2021, Fibocom Wireless Inc(300638) 5g module fm150-ae obtained Vodafone certification, the world’s second largest mobile telecom operator. In January 2022, the company announced that the 5gsub6ghz module fm160-cn supporting 3GPP release 16 has entered the engineering sample submission stage, becoming the first 3GPP release 16 industrial module customized for China. On January 7, 2022, at the annual International Consumer Electronics Exhibition (CES), the company announced that its high-performance LTE module fm101 took the lead in obtaining important regulatory certification in Europe and the Americas, including CE certification for fm101-eau and FCC certification for fm101-na. The company has made further progress in acquiring Ruiling wireless. As of August 31, 2021, Ruiling wireless has achieved an operating revenue of 1.53 billion yuan and a net profit of 38 million yuan. According to zoth’s production and research data, Ruiling wireless’s share in the vehicle wireless communication module market reached 17.6% and 19.1% in 2019 and 2020 respectively. It is expected that in the future, with the release of synergy between the company and Ruiling wireless, the company’s performance will reach a new level.
High performance growth and effective cost control: the company has excellent performance. According to the company’s third quarterly report, in the first three quarters of 2021, the company achieved an operating revenue of 2.854 billion yuan, a year-on-year increase of 45.0%; The net profit attributable to the parent company was RMB 323 million, a year-on-year increase of 44.3%. Among them, the revenue in Q3 of 21 was 1.032 billion yuan in a single quarter, a year-on-year increase of 47.2% and a month on month increase of 7.3%; The net profit attributable to the parent company was 121 million yuan, a year-on-year increase of 40.1% and a slight decrease of 1.2% month on month. Since 2021, the company’s net profit margin has been increasing in the case of a decline in gross profit margin. The gross profit margin of the company’s sales in the first three quarters of 2021 was 25.4%; The sales expense rate, management expense rate and financial expense rate were 3.1%, 12.1% and 0.2% respectively, with a month on month decrease of 0.1pct, 0.7pct and 0.1pct respectively; The net profit margin on sales was 11.3%. The company continued to increase R & D investment and layout. In the first three quarters of 2021, the company’s R & D expenses reached 287 million yuan, with a R & D expense rate of 10.1%. As of H1 2021, the total number of employees of the company is 1369, of which R & D personnel account for more than 60%.
With the rapid development of the Internet of things industry, it is expected that the penetration rate of China’s Internet of vehicles will exceed 75% in 2025: according to the statistics of the Global Association for mobile communication systems (GSMA), the number of global Internet of things equipment connections will reach 12.6 billion in 2020. According to GSMA’s prediction, the number of global Internet of things devices (including cellular and non cellular) will reach about 24.6 billion in 2025. “Interconnection of all things” will become an important direction for the future development of the global network. According to the statistical data of counterpoint, the company ranked second among the global cellular Internet of things module suppliers in the third quarter of 2021. According to the company’s announcement, the company’s main partners include HP, Lenovo, Dell, Intel, etc. According to the data of prospective industry research institute, the penetration rate of China’s Internet of vehicles industry has reached 48.8% in 2020, and the number of Internet of vehicles users is about 140 million. The prospective industry research institute predicts that the penetration rate of China’s Internet of vehicles industry will exceed 75% and the user scale will exceed 380 million in 2025. The company will take advantage of the development of the Internet of things and the Internet of vehicles to achieve rapid development.
Investment suggestion: the company’s performance maintains rapid growth, continuously develops new modules and improves its own product matrix. At the same time, the company actively deepened the layout in the field of Internet of vehicles, made effective progress in the acquisition of Ruiling wireless, and will fully benefit from the second growth curve brought to the company by the rapid growth in the field of Internet of vehicles in the future. We estimate that the company’s operating revenue from 2021 to 2023 will be RMB 3.879 billion (+ 41.4%), RMB 5.737 billion (+ 47.9%) and RMB 8.260 billion (+ 44.0%) respectively; The net profit attributable to the parent company was 396 million yuan (+ 39.6%), 567 million yuan (+ 43.2%) and 761 million yuan (+ 34.3%) respectively. We gave the company 40 times PE in 2022 and the target price was 54.8 yuan. Maintain the “Buy-A” investment rating.
Risk tip: there are risks of intensified market competition, exchange rate fluctuations, promotion and mass production of integrated chips to replace the company’s main products, wireless communication modules, and adverse acquisition and integration
