\u3000\u30 Chongqing Baiya Sanitary Products Co.Ltd(003006) 38 Fibocom Wireless Inc(300638) )
Investment summary:
The company is the world's leading provider of wireless communication modules, focusing on the field of Internet of things for more than 20 years. The company's operating revenue and net profit attributable to the parent company maintained rapid growth, and Q3 ranked second in the global share in 2021.
The company's core team continues to cultivate the communication industry and attaches importance to technology accumulation and independent R & D capability. By 2021, the company's R & D technicians accounted for 62.4%. R & D investment has increased year by year, and R & D expenses have increased from 51 million yuan in 2017 to 456 million yuan in 2021, an increase of 9 times.
The company has formed close cooperative relations with baseband chip suppliers such as Intel, Qualcomm, MediaTek and Ziguang zhanrui, and obtained Intel's strategic investment; Through years of active development, the company has a number of high-quality customer resources, which we believe provides a strong guarantee for the stable and long-term development of the company.
The company adopts the asset light mode, focusing on the two core links of product R & D and sales. In the production link, the company adopts the outsourcing mode, which is conducive to reducing the management cost and responding to the needs of customers in time.
Compared with peers, the company's profit margin has been far ahead. On the one hand, because the company's strategy focuses on high-value products, the gross profit margin is better than that of its peers; On the other hand, due to the company's continuous expansion of overseas business with high profit margin, the proportion of overseas business increased from 25.1% in 2017 to 50.8% in 2021.
5g, artificial intelligence and other technologies accelerate the process of interconnection of all things. Communication module is the basis of interconnection of all things. It is widely used in the downstream of the industry, and the module industry is expected to benefit for a long time. At the same time, the industry pattern shows a trend of rising in the East and falling in the West. The global share is gradually concentrated to China's top manufacturers, and small module manufacturers are gradually eliminated. Moreover, industry barriers have gradually formed to prevent new players from entering. The company seizes the industry opportunity and actively carries out layout in the application fields such as notebook computer, POS machine and Internet of vehicles.
Fully interconnected notebook computers have opened a new era, and the built-in rate of cellular modules is expected to be further improved. With the release of all notebook computer manufacturers around the world, new office models have been launched one after another. The company has cooperated with leading manufacturers HP, Lenovo and Dell for many years, accounting for more than 50% of the market in this field. It has rich experience in technical support and supply flexibility, and is expected to continue to make breakthroughs in this field.
The rapid development of mobile payment drives the increase of POS shipments, and POS machines are developing in the direction of intelligence. The annual compound growth rate of global POS shipments exceeded 20%, driving the continuous improvement of module shipments. The company has formed a long-term and stable cooperative relationship with major customers in the industry. Facing the era of intelligent POS, the company is in cat 1. Products are also well prepared, and POS business is expected to usher in new growth.
The intelligent development of the Internet of vehicles is inseparable from the blessing of the communication module. The scale of the Internet of vehicles market is increasing, the penetration rate of new Internet connected vehicles is gradually increasing, and the on-board module is the first link to benefit in the development process. The company has established a subsidiary Guangtong Yuanchi and acquired Sierra's vehicle front mounted module business to globally layout related businesses. Sierra has a high market share in the field of vehicle modules. At present, Fibocom Wireless Inc(300638) has launched a variety of products and has become a supplier of Byd Company Limited(002594) , Chang'an, great wall, Geely and other auto enterprises.
Investment suggestion: the company is currently at the peak of 5g construction and Internet of things development, and its revenue and share are increasing. The historical average of PE of the company is 60.5 times. Considering the historical average, industry average and industry status, the company is given 40 times PE, corresponding to the target price of 45.2 yuan. "Buy" rating is given for the first time.
Risk warning: market competition intensifies and the company's profits are damaged; The penetration rate of downstream industries is lower than expected, affecting the growth rate of the company's business; The company's acquisition of Sierra's vehicle front mounted module business will affect the company's performance if the business integration is less than expected; If the upstream chips are seriously out of stock, it will affect the production and sales of the company's modules.
