\u3000\u3 Shengda Resources Co.Ltd(000603) 236 Quectel Wireless Solutions Co.Ltd(603236) )
Event review:
The company released its first quarterly report. In 2022, Q1 achieved a revenue of 3.058 billion yuan, a year-on-year growth rate of 64.74%, a net profit attributable to the parent of 124 million yuan, a year-on-year growth rate of 104.51%, and a net profit attributable to the parent of 124 million yuan after deduction, a year-on-year growth rate of 104.25%. The comprehensive gross profit margin of Q1 in 2022 was 18.19%, 2.44 percentage points higher than Q4 in 2021. The comprehensive expense rate of R & D, sales and management was 14.55%, which decreased compared with the same period last year, and the management efficiency was improved and the scale effect was further revealed.
The demand for modules continued to be strong, and the tight supply situation of main chips was alleviated
The high boom of the module industry continues, and the high-speed modules are expected to continue to increase in volume. According to the latest data of countpoint, the shipments and revenue of global cellular Internet of things modules in 2021 increased by 59% and 57% respectively year-on-year. Among them, the revenue of Q4 global cellular Internet of things modules increased by 58% year-on-year, and 5g grew the fastest (+ 324%) according to the system; By scenario, automobile, CPE, industry, PC and POS rank the top five. At the same time, in terms of medium and low rate modules, CAT1 is expected to continue to increase its volume thanks to 2G / 3G network withdrawal and the support of domestic chip manufacturers; Lpwa has benefited from the normalization of China's epidemic prevention, and the demand for equipment networking in energy, agriculture and other fields has increased rapidly. In terms of competition pattern, Q4's revenue share of Chinese module manufacturers accounts for more than 40%, of which Quectel Wireless Solutions Co.Ltd(603236) 266% ranks first. In terms of upstream chip supply, the global baseband communication chip supply is still tight. At present, chip manufacturers are still in the state of production and sales. They adopt the goods distribution strategy for downstream module manufacturers, and the advantages of large customers such as moving away in taking goods are gradually emerging.
The advantages of global layout appear, and the impact of China's epidemic on the company's operation is limited
Under the severe situation of epidemic prevention and control in China, the company has achieved high growth in revenue and performance, which we believe is mainly due to: 1) internationalization strategy. The functional departments of the company are located in Shanghai headquarters, the R & D departments are located in Hefei, Foshan, Guilin, Wuhan, Belgrade and Vancouver, and the production links are located in Changzhou, Hefei, Kunshan, Malaysia and Brazil, The overall operation is less affected by the epidemic situation; 2) Self built production line: the full production of the company's own production line will be 135 million pieces / year in 2022. The self built production line not only reduces the cost, but also ensures the safety and delivery capacity of the supply chain; 3) The increase in gross profit margin is mainly due to the downstream transmission of prices and the increase in the proportion of overseas revenue. The proportion of overseas revenue of the company increased from 38% in 2020 to 44% in 2021. On the premise of stable supply of main chips, the gross profit margin of the company is expected to improve quarterly.
Investment advice
We believe that the fundamentals of the company are excellent, and the operation and management levels have improved. As a global enterprise, facing the extremely unfavorable external environment, the business scale of the company still continues to expand rapidly. On the one hand, the changes in industry demand and pattern have brought historic opportunities to Chinese module manufacturers. On the other hand, through its own efforts, the company has seized the opportunity and rapidly grown into an industry leader by binding Qualcomm to obtain leading genes, continuously investing in R & D and certification, and selecting appropriate market competition strategies. We adjusted the predicted value of the company's net profit attributable to the parent company from 2022 to 2024 to RMB 603, 958 and 1429 million (the previous value was RMB 561, 935 and 1410 million). The corresponding EPS is divided into 4.15 yuan, 6.59 yuan and 9.83 yuan. The current share price corresponding to PE from 2022 to 2024 is 34.33x/21.61x/14.49x respectively, maintaining the "buy" rating.
Risk tips
1) the global IOT chip supply and demand gap is difficult to improve in the short term, affecting the stability of supply; 2) The improvement of operation and management is less than expected; 3) The demand for downstream vehicle mounted and 5g modules was lower than expected.
