\u3000\u30 Guangdong Tengen Industrial Group Co.Ltd(003003) 94 Suzhou Tfc Optical Communication Co.Ltd(300394) )
The performance continued to grow steadily. The company released the first quarter report of 2022. In the first quarter of 2022, the revenue was 283 million yuan, a year-on-year increase of 16%, and the net profit attributable to the parent was 83 million yuan, a year-on-year increase of 18%. The profit in a single quarter was basically the same as that in the fourth quarter of last year (excluding the additional tax rebate income in the fourth quarter of last year), maintaining a good growth trend.
In the first quarter of 2022, the overall gross profit margin of the company reached 49.69%, the net profit margin was 29.57%, and the profit margin remained stable. Under the background that the overall raw material price is relatively high and the RMB exchange rate against the US dollar is low, good business results have been achieved. The company is expected to benefit from the recent depreciation of RMB to a certain extent.
At the same time, in the first quarter, due to the impact of the epidemic in some areas, the production capacity of the company’s subsidiaries may have a short repair. Under the above environment, it is commendable to record a sustained and stable growth in the first quarter.
Industry demand continues to improve, and 2022 is expected to improve quarter by quarter. In 2021, the demand of the industry fluctuates, especially the demand of Chinese operators. At present, technology companies at home and abroad have stepped up the exploration and application innovation in emerging fields such as metauniverse, and the general trend of continuous growth of data traffic is determined. As Internet giants such as meta enter metauniverse, the capital expenditure on the overseas digital communication side is also expected to usher in a new turning point. Facebook’s capex in 2022 is expected to increase by about 60% year-on-year to $29-34 billion. With the additional capital expenditure of overseas cloud manufacturers, the whole optical module / optical device industry is expected to usher in a new round of demand expansion in 2022.
The industrial structure is still good, the company’s endogenous expansion category is progressing smoothly, and continues to transform into a one-stop solution manufacturer. The downstream of the company faces the optical communication industry. With the construction of 5g / data center, the sales scale of the company’s optical communication devices is expected to continue to expand. The future development of the company is not completely limited to optical module / optical communication: with excellent precision manufacturing / cost control / supply chain management capabilities, the company is expected to expand its business scope in the future, penetrate into industries such as lidar / medical testing, and open the growth ceiling. The high threshold of industry process / cost control / channel will help the company continue to absorb market share and expand business scale after transforming the one-stop scheme.
Investment suggestion: it is estimated that the net profit attributable to the parent company from 2022 to 2024 will be RMB 420 / 550 / 680 million, the corresponding EPS will be RMB 1.08/1.40/1.74, and the current share price will be 17 / 13 / 11 times of PE respectively. Considering the high prospect of optical communication and the certainty of the company’s growth, the “buy” rating will be maintained
Risk warning: the expansion of new product line is not as expected; The optical communication market is cold, and the demand of downstream manufacturers is insufficient; The price fluctuation of product line continues.
