\u3000\u30 Beijing Telesound Electronics Co.Ltd(003004) 96 Thunder Software Technology Co.Ltd(300496) )
Matters:
The company released the first quarter report of 2022. The report shows that in the first quarter, the company achieved an operating revenue of 1.153 billion yuan, a year-on-year increase of 45.81%; The net profit was 156 million yuan, a year-on-year increase of 41.36%.
Ping An View:
The results in the first quarter were in line with expectations, and the three main industries achieved rapid growth: as a leading operating system technology supplier in China, the company has a deep layout in the fields of smart phones, smart Internet connected vehicles and IOT. With the “software definition” of automobile and the acceleration of networking, the importance of operating system continues to increase. The company occupies the market opportunity through cooperation with Qualcomm in this field; In terms of Internet of things, the company’s modules and software products have been widely used in video conference, camera, floor sweeping Siasun Robot&Automation Co.Ltd(300024) and other fields, and its visual solutions have strong competitiveness in the market; The R & D outsourcing undertaken by mobile phone business is also increasing, and the company’s business in this field has maintained rapid growth. In the first quarter of 2022, the growth rate of the company’s revenue and profit exceeded 40%, in line with market expectations, and the three main industries maintained rapid growth. Among them, the company’s intelligent software business realized a revenue of about 380 million yuan, a year-on-year increase of about 24.6%; The revenue of intelligent vehicle business was about 355 million yuan, with a year-on-year increase of about 50.4%; The revenue of intelligent Internet of things business was about 418 million yuan, a year-on-year increase of about 67.2%.
The company’s expenses are well controlled and its cash flow is improved over the same period last year: among the three businesses of the company, most products of IOT business are delivered in the form of modules, including a large number of hardware manufacturing, with a low gross profit margin. The rapid growth of this business has dragged down the company’s gross profit margin to a certain extent. Internet of things business is an important direction of the company’s development. Even if the gross profit margin is lower, it has great potential because it faces a massive Internet of things market. In the first quarter of 2022, the company’s gross profit margin was 41.40%, down 4.33 percentage points from the same period of the previous year, but it is improving compared with 39.40% of the whole year of the previous year. In the first quarter, the better period cost control also provided a guarantee for the growth of the company’s profits. In the first quarter of 2022, the company’s period expense rate was 29.15%, a decrease of 3.02 percentage points over the same period of the previous year. Profit quality is also improving. The company’s net operating cash flow in the first quarter reached 722604 million yuan, an increase of 26.85% over the same period last year.
Cockpit projects are growing rapidly, and there is great room for the growth of autopilot related solutions: after the rapid growth of smart cockpit business over the years, the volume of smart cockpit business in the first quarter has been close to that of traditional business smart phones. Among them, the company’s 8155 cockpit chip based on Qualcomm is at the peak of shipment, and the demand for corresponding operating system, middleware and tool chain has maintained a high growth. Compared with the mature cockpit market, the deployment of the company’s autopilot business is also accelerating. On the one hand, it is doing low-speed autopilot based on cockpit computing power redundancy, such as automatic parking, look around, etc; On the other hand, the company is also following Qualcomm’s latest ride computing platform to make efforts in the field of high-speed automatic driving. There are already vehicle manufacturers in China to deploy ride platform, and the company will also benefit in this field. On the whole, we believe that the business layout of the company is highly consistent with the current intelligent vehicle and the subsequent automatic driving, and the growth is worth looking forward to.
With the increase of fixed holdings, the Internet of things business will continue to grow rapidly: while releasing the annual report, the company announced the plan for private placement. The plan shows that the company will issue shares to specific objects and plans to raise no more than 3.1 billion yuan, of which 1.005 billion yuan is invested in the research and development of edge computing stations, which means that the company will start to expand to the underlying hardware field based on its ability in operating system, middleware and other software. The company’s core advantages in the field of IOT focus on the continuous accumulation of software and the establishment of software cores that cannot be copied and compared by others through the continuous investment of software: including platform software, algorithm middleware, the whole development environment and tools, etc. This is completely different from the business model and core competitiveness of other standard parts of the Internet of things. For the migration of future computing, it is expected that most data computing will take place in edge computing in the next 10 years. However, in the early stage of the development of edge computing, it is very fragmented and has not formed standardization. Such an industrial background has given the company great development opportunities and space. The technical support of 5g and AI will accelerate the implementation of edge computing in rich application scenarios, and the company will benefit from its previous continuous accumulation.
Investment suggestion: the company has strong competitiveness in the field of operating system, and its products and services have been widely used in smart phones, smart cars, IOT and other sectors. In the follow-up, with the continuous layout of automatic driving business and the project construction in the fields of vehicle operating system, edge computing and extended reality, the company’s ability circle in intelligence will be further enlarged. Based on the company’s latest financial report and our judgment on the industry trend, we raised the company’s profit expectation. It is expected that the company’s EPS from 2022 to 2024 will be 2.12 yuan (the former value is 2.07 yuan), 2.92 yuan (the former value is 2.85 yuan) and 4.00 yuan (the former value is 3.77 yuan), corresponding to the PE of 39.1x, 28.3x and 20.7x on April 28, respectively, maintaining the “strongly recommended” rating.
Risk tips: 1) the development of intelligent vehicles is not as expected. The development of intelligent vehicle business is closely related to the process of vehicle intellectualization. If the development and popularization of intelligent vehicles are slow due to factors such as technology and market, it will drag down the growth of the company’s intelligent vehicle business. 2) 5g promotion was not as expected. For intelligent software and Internet of things business, 5g technology application is a new driving force. If 5g construction and promotion are slow, the promotion effect on the growth of the two businesses will be weakened. 3) Poor product technology research and development. As a typical technology driven enterprise, the company’s business development highly depends on the R & D of new technologies and products. If the R & D progress is lower than expected, it may affect the market competitiveness of the enterprise.
