\u3000\u3 Shengda Resources Co.Ltd(000603) 712 Tianjin 712 Communication & Broadcasting Co.Ltd(603712) )
Core view
With strong technical strength, it is the core supplier of wireless communication equipment in our army. The company took the lead in successfully developing the first generation of ultrashort wave communication equipment and the first generation of aviation anti-interference equipment of our army, maintaining China’s leading level in anti-interference, confidentiality and networking. The company is one of the few enterprises in the industry that can achieve full military coverage. Its products are widely used in land, sea, air, rocket army and strategic support forces. Especially in the field of airborne ultrashort wave communication, the company has core research and production capacity, and its products cover various platforms such as fighter, bomber, transport aircraft, helicopter, UAV, trainer and so on. During the 14th Five Year Plan period, the national military expenditure increased steadily, the superposition of equipment informatization accelerated, and the company’s military products business grew rapidly.
It is a leader in the field of railway wireless communication and an industry standard setter, and has expanded its business to rail transit and other fields. The company has successfully developed and produced China’s first generation railway radio train dispatching station, which is the leader in the field of railway wireless communication in China and the main developer of industrial standards. The company also expands its business to the field of private network wireless communication such as urban rail transit, maritime affairs and police. In terms of railway communication, the company accelerated the upgrading of products and expanded the construction of traffic safety and intelligent railway based on communication; In terms of rail transit communication, the company has firmly grasped the competitive bidding construction of rail transit in first tier cities and strengthened the intensive cultivation of second and third tier cities.
Revenue and profit continued to maintain rapid growth. From 2017 to 2021, the compound annual growth rates of the company’s revenue and net profit attributable to the parent company reached 23.46% and 37.20% respectively. In 2021, the company achieved an operating revenue of 3.451 billion yuan, a year-on-year increase of 28.00%, and a net profit attributable to the parent company of 688 million yuan, a year-on-year increase of 31.58%. By product: the company’s wireless communication business revenue was 2.465 billion yuan, a year-on-year increase of 67.74%; The revenue of system products was 823 million yuan, a year-on-year decrease of 24.37%, which was mainly due to the fact that some customers of system products had not completed the acceptance and could not confirm the revenue. The company’s overall gross profit margin was 47.59%, a year-on-year decrease of 0.53pct. Among them, the gross profit margin of wireless communication business was 48.86%, a year-on-year increase of 0.74pct, and the gross profit margin of system product business was 47.11%, a year-on-year decrease of 4.23pct. In 2022q1, the company achieved an operating revenue of 410 million yuan, a year-on-year increase of 18.24%, a net profit attributable to the parent company of 21 million yuan, a year-on-year increase of 26.69%, and a gross profit margin of 46.00%, a year-on-year decrease of 1.12pct.
Continue to increase R & D investment and maintain the leading position in the industry. In 2021, the company’s expense rate was 29.95%, with a year-on-year increase of 1.17pct. Among them, the R & D expense rate was 22.47%, with a year-on-year increase of 1.03pct. In recent years, the company has maintained a high proportion of R & D investment of more than 20% every year, creating a core competitiveness in the field of wireless communication technology. The company has abundant voice in the industry and has participated in the formulation of many wireless communication systems such as short wave, ultrashort wave, scattering communication, private Internet, data link, satellite navigation, railway and urban rail transit, leading the development of the industry.
Military products have successfully won the bid in many projects, and civil products have been successfully expanded in the railway and urban rail communication market. In the field of military products communication: the company’s new comprehensive and systematic products won the first prize and can be popularized and applied on a variety of aircraft platforms in the future; An improvement and improvement project covering handheld, backpack, vehicle, etc. has gradually completed the finalization of train loading, started small batch production, and started the project approval and development of the next generation of products; Several product schemes of Beidou 3 typical demonstration project won the bid and were shortlisted. In the field of civil communication: the order contracts for multiple sets of locomotive integrated wireless communication equipment have been signed, and the LTE equipment of Shuohuang Railway continues to maintain a high market share; The implementation of the China Laos railway dual network switching locomotive integrated wireless communication project has played a positive demonstration role for the company’s products to successfully develop the ASEAN railway communication project; In addition, the company has signed urban rail transit communication contracts in many cities, expanding the company’s business coverage and industry influence.
Investment suggestion: during the 14th Five Year Plan period, the equipment informatization was accelerated, and the downstream demand of the company’s military wireless communication equipment was strong; In the field of civil use, the company continued to work in the field of railway and urban rail transit, and its competitiveness was further strengthened. It is estimated that the net profit of the company from 2022 to 2024 will be 882 million yuan, 1128 million yuan and 1451 million yuan respectively, and the corresponding PE will be 23.7, 18.5 and 14.4 respectively. For the first time, give a “overweight” rating.
Risk warning: covid-19 epidemic has resulted in product delivery and R & D achievements falling short of expectations.
