\u3000\u30 Beijing Zznode Technologies Co.Ltd(003007) 62 Jushri Technologies Inc(300762) )
Performance review
The company released the annual report of 2021 and the first quarterly report of 2022. In 2021, the annual revenue was 729 million yuan, with a year-on-year growth rate of + 13.8%, the net profit attributable to the parent company was 235 million yuan, with a year-on-year growth rate of + 40.5%, and 207 million yuan after deduction, with a year-on-year growth rate of + 49.62%; In 2022q1, the revenue was 17 million yuan, with a year-on-year growth rate of - 72.47%, and the loss was about 20 million yuan, mainly due to the repeated epidemic in China, which dragged down the progress of some projects and product delivery. The company's annual performance in 2021 is in line with expectations. Due to the strong planning of the military industry in which the company is located, seasonal fluctuations will not affect the realization of annual mission objectives.
At the beginning of national defense informatization construction, the military 4G penetration rate is low and far from the ceiling
The core contradiction of China's national defense construction has shifted from mechanization to intelligence. With the help of information means, we can give full play to the effectiveness of weapon platforms. Military communication is the central nerve of the whole national defense informatization. At present, all kinds of wired / wireless transmission equipment and switching networks of our army are not perfect, especially the lack of broadband wireless communication means, and the communication capacity of the last kilometer of the battlefield is limited. Among them, military 4G can meet and improve the rigid needs of command and control, damage assessment and so on. The rocket army began to train in 2016, the army's assembly rate is not high, the air force and combat support have just started, and the navy has not yet had finalized equipment, and the overall penetration rate is still very low. In the first year of the 14th five year plan, the whole army will focus on project demonstration. In the future, the speed of equipment assembly will be accelerated year by year.
Military broadband communication is the absolute leader. The growth path of the company is clear and the space is large
The company is optimistic about the scale of military broadband equipment in the short term. The company is the overall of military broadband technology and undertakes the research and development tasks of most military broadband models and equipment. It has 38 models of products produced, sold and under research, covering all arms of the army; In the medium term, we are optimistic about the expansion of the company's product matrix. In terms of military products, the company has technical reserves such as broadband ad hoc network and microwave network radio. In terms of civil products, the company has completed private placement and actively promoted the development of domestic 5g small base stations. At present, it has obtained the network access license; In the long term, the company is optimistic about the leading technology and share of military 5g equipment. The market space of military 5g is larger than that of 4G. The company has established a military civilian integration 5g technology laboratory and took the lead in developing the principle prototype of military 5g small station and multi-mode integration terminal, which is expected to continue to be in the lead in the next generation of military communication system.
The company's financial situation is stable, the collection continues to improve, and the operating cash flow has reached the best in history
In terms of key financial indicators, in terms of inventory, the company's inventory at the end of 2021 was 220 million yuan, an increase of 36.05% over the beginning of the year. Due to the company's increasing strategic reserves and increasing the stock of raw materials and purchased components; In terms of gross profit margin, the company's comprehensive gross profit margin in 2021 was 63.75%, basically the same as that in the same period last year. The technical barriers of military broadband equipment are high, the finalization is late, and the development units are scarce. It is expected that it will be limited by the localization of components and the change of bidding mechanism; In terms of expenses, the company's R & D expenses decreased by 6.28% year-on-year, mainly due to the capitalization of qualified R & D expenses. It is expected that the subsequent capitalized R & D expenses will decrease. Administrative expenses increased by 72.43% year-on-year, mainly due to the company's withdrawal of share based payment expenses, and the subsequent impact is expected to be reduced; In terms of cash flow, the company's net operating cash flow inflow in 2021 was 222 million yuan, reaching the best level in the company's history, mainly due to the continuous improvement of the return of accounts receivable, sufficient orders on hand and the strengthening of delivery and collection capacity.
Investment advice
We believe that the company, as the absolute leading enterprise of military broadband, will continue to benefit from the construction of national defense informatization and the improvement of military broadband penetration. In addition, the company will prospectively layout the next-generation military communication system and domestic 5g small base stations, and expand its long-term positioning from military 4G to the field of information equipment characterized by broadband. We adjusted the predicted value of the company's net profit attributable to the parent company from 2022 to 2023 to 307 and 406 million yuan (the previous value was 324 and 440 million yuan), increased the predicted value of net profit attributable to the parent company in 2024 to 544 million yuan, corresponding to EPS of 0.78, 1.03 and 1.39 yuan, and the current share price corresponding to PE of 20222024 was 17.25x/13.05x/9.72x respectively, maintaining the "buy" rating.
Risk tips
1) repeated epidemic situation and product delivery of the company; 2) Military 4G demand is less than expected; 3) The decline of military audit pricing leads to the risk of decline in gross profit margin.
