\u3000\u30 Chongqing Baiya Sanitary Products Co.Ltd(003006) 38 Fibocom Wireless Inc(300638) )
Event:
The company released the report for the first quarter of 2022, with a revenue of 1.178 billion yuan in 2022q1, a year-on-year increase of 36.98%; The net profit attributable to the parent company was 105 million yuan, a year-on-year increase of 30.18%; The deduction of non net profit was 99.01 million yuan, a year-on-year increase
An increase of 40.65%. Our comments are as follows:
1. The revenue and profit maintained rapid growth and continued to enrich the product and market layout
The company’s 22q1 revenue increased by 36.98% year-on-year, showing a sustained and rapid growth trend. We expect it to be due to the booming demand of the industry. At the same time, the company enriched its product line and increased market expansion to promote the share. The company’s 22q1 attributable profit and non deductible profit increased by 30.18% and 40.65% respectively, mainly following the growth of revenue and in line with market expectations.
2. The pressure of price increase on the cost side may be gradually relieved, and the improvement of operating efficiency will drive the improvement of profitability
The company’s 22q1 gross profit margin was 22%, a year-on-year decrease of 3.11 percentage points and a month on month increase of 0.75 percentage points, reflecting that the pressure of rising prices of raw materials such as upstream chips began to ease. 22q1 net interest rate was 8.88%, a year-on-year decrease of 0.46 percentage points and a month on month increase of 2.66 percentage points. The overall expense rate of the four items was 15.01%, with a year-on-year decrease of 2.06%, reflecting the continuous improvement of the company’s operating efficiency. We believe that the overall profitability is expected to improve under the continuous easing of raw material price pressure and the continuous appearance of the company’s scale effect in the future.
3. The industry continues to have a high boom, and nuggets high-quality track expects high business growth
The Internet of things industry continues to be booming, and the company’s market share is leading. According to the statistics of IOT analytics, the number of Internet of things connections has been flat in 2019, and the number of non internet of things connections is expected to increase rapidly at a compound growth rate of 21% from 2019 to 2025. It is expected to reach 12.3 billion active IOT terminals in 2021. In addition, according to China’s three-year action plan for the construction of new infrastructure of the Internet of things (20212023), the number of Internet of things connections in China is required to exceed 2 billion by the end of 2023. The company actively laid out the Internet of things module track. According to the statistics of 2021q4 Internet of things cellular module revenue share released by counterpoint, Fibocom Wireless Inc(300638) (5.0%) and Ruiling wireless (5.5%) together accounted for 10.5% of the market share, ranking second in the whole industry after the merger. We expect that the share is expected to continue to grow with the company’s continuous expansion of products and market customers.
Looking forward to the future, the company has laid out high-quality tracks, the industry continues to be prosperous & share expansion, and the growth momentum of performance is strong: 1) the penetration rate of modules in the PC field continues to improve, the first mover / market advantage / share is stable, and 5g products continue to give priority to cards, which is expected to continue to grow rapidly in the future; 2) Benefiting from the high prosperity of intelligence and networking, the on-board module expands the market at home and abroad through the double line layout of Ruiling wireless + Guangtong Yuanchi, accelerates Sierra’s integration from procurement, R & D to marketing, and continues to expand new customers, with high growth prospects in the future; 3) Through continuous and vigorous research and development, the company has continued to enrich the types of IOT products, and began to vigorously expand the overseas market. Gateway, CAT1 and other products are expected to continue to usher in high-volume growth.
Profit forecast and investment suggestions:
Fibocom Wireless Inc(300638) as one of the leaders of the Internet of things module, it is the subject of sustained and rapid growth of performance with strong core competitiveness in the high prosperity track. It is estimated that the net profit attributable to the parent company in 22-24 years will be 560 million, 720 million and 900 million yuan, corresponding to 21x PE in 22 years; Considering the full consolidation of Sierra’s financial statements, due to the delay of the consolidation time compared with the expectation, the company adjusted its pro forma net profit from 22 to 23 years to be 620million and 800million (the original value was 650million and 840million) to be 1.02 billion yuan in 24 years, corresponding to a PE of 19x in 22 years, maintaining the “buy” rating.
Risk tips: the risk of continuous price rise of upstream raw materials, the risk of fierce industry competition affecting profitability, product renewal iteration, and the risk that the development of downstream market is not as expected
