\u3000\u3 Shengda Resources Co.Ltd(000603) 236 Quectel Wireless Solutions Co.Ltd(603236) )
Conclusions and suggestions:
The company released its 2021 annual report, with an operating revenue of 11.262 billion yuan, yoy + 94.45%, and a net profit of 358 million yuan, yoy + 89.58% (net profit after deduction of non-profit of 335 million yuan, yoy + 97.18%), equivalent to EPS of 2.49 yuan, which met the expectations. Quarterly, the company achieved an operating revenue of 3.786 billion yuan in 2021q4, yoy + 99.49%, and a net profit of 121 million yuan, yoy + 89.86% (net profit of 110 million yuan after deduction, yoy + 54.66%). The performance is in line with expectations.
Rapid growth of revenue and continuous improvement of overseas business: the company’s rapid growth of revenue mainly benefits from the rapid growth of LTE module, lpwa module, on-board module, 5g module and other fields: the company has launched a number of WiFi vehicle specification level modules and 5g vehicle specification level modules, reflecting the results of long-term layout in the on-board field; And the company’s 5g module products have the first mover advantage in the industry. At the same time, the growth rate of the company’s overseas business accelerated in the past 21 years, and the operating profit accounted for 51.33%, which is in line with the promotion speed of the company’s internationalization strategy.
The profitability continues to improve, and the pressure on the gross profit side is serious: the gross profit margin of the company in 21 years is 17.56%, down 2.67 percentage points year-on-year, of which the gross profit margin of Q4 is 15.75%, which is mainly due to the pressure on the gross profit margin caused by the disturbance of the upstream supply chain and the increase of raw material prices. It is expected that the gross profit margin level of the company will rise with the return of raw material prices. On the other hand, the company’s expense control ability has improved significantly, with a net profit rate of 3.18%, which is 0.08 percentage points higher than the previous year while the gross profit margin is under pressure. Among them, the sales expense has increased by 82.24% year-on-year and the management expense has increased by 44.62% year-on-year. The scale effect of the company has appeared. In the future, with the reduction of cost side pressure, the profitability of the company is expected to improve rapidly.
Cellular IOT modules continued to boom, and the company’s 5g modules were shipped on a large scale: according to the report of the research company counterpoint, the global shipment of cellular IOT modules exceeded 100 million for the first time in the second quarter. The module shipment in the second quarter increased by 53% year-on-year, with a new growth rate, among which the shipment of 5g modules increased the fastest, with a year-on-year increase of 800%. In terms of market share, Quectel Wireless Solutions Co.Ltd(603236) 2q has a global market share of 21.2%, and continues to remain the first in the industry with a stable leading position. As of the first half of the year, the company has designed nearly 30 5g modules to support more than 1000 industry customers around the world in terminal product development and commercial use. On August 9, 2021, China Mobile announced the bid winning results of centralized procurement of 5g general module products, with a total procurement of 320000 pieces. Quectel Wireless Solutions Co.Ltd(603236) five 5g modules won the bid with the largest share, with a total of about 150000 pieces, accounting for nearly 50%. This large share of the bid has verified the leading strength of the company’s 5g module in product richness, performance stability and maturity. It is expected that the company will continue to benefit from the demand of 5g construction for wireless communication modules.
Profit forecast: we expect the net profit of the company in 2022 / 23 to be 570 / 854 million yuan respectively, yoy + 59.08% / + 49.98%, equivalent to EPS of 3.92/5.88 yuan. At present, the corresponding PE of A-share price is 33 / 22 times, giving a “buy” rating.
Risk tips: 1. The increase of raw materials such as upstream chips exceeded expectations; 2. Intensified market competition; 3. The application demand of downstream industries is lower than expected.
