\u3000\u3 Shengda Resources Co.Ltd(000603) 236 Quectel Wireless Solutions Co.Ltd(603236) )
Event:
The company released the first quarterly report of 2022, realizing an operating revenue of 3.058 billion yuan, a year-on-year increase of 64.74%; The net profit attributable to the parent company was 124 million yuan, a year-on-year increase of 104.25%; Deduct non net profit of 106 million yuan, with a year-on-year increase of 111.35%.
Our views are as follows:
1. Deepen the layout of downstream areas, and the leading business revenue of Internet of things module is expected to increase
Operating income continued to maintain a high growth. Compared with the same period last year, the company’s revenue increased by 64.74%, mainly due to the high prosperity of the Internet of things industry, which led to the improvement of the company’s product revenue. At the same time, the company continued to explore and deepen the downstream application fields, and the company’s LTE module, lpwa module, vehicle module, 5g module and other business volume increased in the first quarter. In addition, the company actively innovates and optimizes products and continues to develop customers. We believe that under the continuous high prosperity of downstream industries and the company’s continuous development of end customers, the revenue can maintain a high growth period.
2. The scale effect is obvious, the profitability is improved, and the cost pressure is actively expected to be relieved
The gross profit margin increased month on month, the scale effect appeared, and the net profit margin increased. On the cost side, the company’s gross profit margin in 2022q1 was 18.19%, down 1.19pp compared with 21q1 (19.38%). We expect it to be mainly affected by the rise in the price of upstream raw materials, showing a significant recovery compared with Q4 (15.75%) in 21 years. We expect it to be mainly due to the transmission of prices to the downstream; On the expense side, the company’s 22q1 net interest rate was 4.05%, an increase of 0.79pp compared with the same period last year and 0.87pp compared with the whole year of 21 years. With the improvement of management efficiency, the scale effect of the company gradually appeared. The company has improved its profitability under the continuous high price of upstream raw materials. It is expected that the gross profit margin and net profit margin of the company will increase again after the stabilization and decline of raw materials in the future.
3. Under the high prosperity of the industry, the scale continues to grow, and the company’s share is expected to continue to increase, benefiting fully
Looking forward to the future, the company’s Internet of things share is expected to continue to increase rapidly, and the scale effect is expected to continue to appear under the trend of high income growth: 1) in the past few years, the company has continued to deeply cultivate the cellular Internet of things module industry, the global market share has increased significantly in recent years, and 21q4 continues to be the champion of the global cellular Internet of things module revenue share; 2) The company has rich product series, strong competitiveness of 4G & 5g and other products, and has a certain first mover advantage; 3) The company continues to lay out new products and new businesses, launch a variety of new antenna products, and establish long-term strategic cooperative relations with customers in high-end markets at home and abroad. At the same time, we actively carry out ODM business, and have provided PCBA solutions for head customers in PDA, POS payment, shared travel and other industries, so as to improve the stickiness of head customers in the module industry. 4) The company has a wolf culture, focuses on research and development and sales, and actively promotes the globalization strategy. Its business covers more than 150 countries and regions, and its sales channels are all over China, Europe, North America, Asia, Africa and Latin America. The R & D end of the company provides the basis of technical capability, and the sales end actively develops the global market to inject power into the sustainable growth of the company.
Profit forecast and investment suggestions:
Quectel Wireless Solutions Co.Ltd(603236) as a leader in the industry, it has obvious competitive advantages, and its share is expected to continue to grow, or it may fully enjoy the dividends of the Internet of things industry. At the same time, the scale effect of the company is gradually emerging, and the improvement of profitability is worth looking forward to. It is estimated that the net profit attributable to the parent company in 22-24 years is 611 million yuan, 915 million yuan and 1.241 billion yuan, corresponding to 34x PE in 22 years. The rating of “overweight” is reiterated.
Risk tips: fierce competition in the industry affects profitability, customer development is less than expected, technology update iteration, epidemic impact is more than expected, etc
