\u3000\u3000 Meig Smart Technology Co.Ltd(002881) (002881)
Completely divested the precision component business, and the communication module driven high revenue growth. The company was founded in 2007. After listing in 2017, the company accelerated business transformation, focused on products and solutions with wireless communication technology as the core, and gradually built three business segments: module + terminal + solution. The company’s communication module revenue continued to grow at a high speed, with a compound growth of 75% in three years from 2017 to 2020. According to the company’s performance forecast, the company expects to achieve an operating revenue of RMB 1.95-2.05 billion in 2021, an increase of 73.95% – 82.87% over the same period of the previous year, mainly benefiting from 1) large-scale shipment of 5g intelligent modules in the field of intelligent cockpit of new energy vehicles 2) high year-on-year growth of 4G / 5G data transmission modules 3) continuous breakthroughs in downstream application fields, cloud computing, laptop The layout of HD video and other fields has been deepened. 3) FWA (fixed wireless access) product shipments rose sharply.
With the rapid development of intelligent networked vehicles, the vehicle engine module has ushered in a valuable window period. Since the State Council wrote the initial establishment of independent R & D system and production supporting facilities and industrial clusters of intelligent network vehicles into made in China 2025 in 2015, intelligent network connected vehicles have continued to benefit from policy catalysis. According to the prediction of China Society of automotive engineering, in 2025 and 2030, the online sales ratio of new vehicles in China will reach 80% and 100% respectively, and the sales scale of online vehicles will reach 28 million and 38 million respectively. At present, the development of the global intelligent networked vehicle market is still in its infancy and is expected to usher in rapid development after large-scale commercialization. With years of development experience in Qualcomm, Hisilicon and zhanrui platforms and technology accumulation on Android platform, the company has been widely used in a variety of commercial vehicles and passenger models. According to the company’s announcement, the company has a complete vehicle module product line, covering 5g, c-v2x, wi-fi6, high-precision GNSS positioning and other cutting-edge technologies, and has achieved mass production and delivery in the field of vehicle front loading, vehicle rear loading and vehicle monitoring DVR. In the future, with the continuous expansion of the company’s customer base, the vehicle business is expected to open a new growth curve for the company.
Intelligent module has significant advantages in R & D, fully benefiting from 5g + alot wave. Data transmission module is usually developed based on baseband chip and only has data transmission function; Alot wave stimulates the demand for intelligent modules. Intelligent modules integrate computing power on the basis of data transmission modules, and have their own operating system, with a higher degree of integration. The company has rich experience in intelligent module development. In 2014, it designed its first 4G intelligent module slm753, and sold more than 3 million pieces in the life cycle. From 2020 to 2021, the company successively launched 5g high computing power intelligent module product series srm900l / 900 / 910 / 930, with computing power covering 2-14tops, which will be widely used in smart cockpit, 5g live broadcast and other fields. Intelligent modules have high requirements on the customized development ability of module manufacturers. The company has outstanding R & D ability, and the proportion of R & D investment and R & D personnel are higher than those of main competitors all year round. Benefiting from this, the company’s product ASP is higher than its main competitors and has higher customer stickiness.
The fixed wireless access (FWA) market is growing rapidly, and the company has sufficient technical reserves, which is expected to benefit in depth. FWA refers to the access mode of wireless transmission between the service node and the user terminal, which mainly solves the wireless internet access demand under the condition of insufficient optical fiber connection. The penetration rate of optical fiber in the Chinese market is high, and CPE is mainly in rural, mountainous and other areas where optical fiber is difficult to access; The low coverage of overseas optical fiber makes 5gfwa a a new opportunity in the overseas market to replace the last kilometer of optical fiber access. According to the data of 5g Internet of things industry alliance, the global 5gcpe shipment is expected to increase from 3 million units to 120 million units from 2020 to 2025, and the market scale is expected to increase from 4.8 billion yuan to 60 billion yuan. According to the company’s official website, the company is an important partner of Huawei FWA products and has accumulated profound technical reserves in the process of cooperation with Huawei. The company launched srt873, srt838s, srt852 and other products, creating a relatively complete FWA product matrix. According to the company’s official website, in August 2021, the company won the bidding project of China United Network Communications Limited(600050) for two 5g products, of which 5gfwa intelligent terminal srt838u was the first candidate, with prominent product competitiveness. We believe that the company has sufficient FWA technical reserves, significant product competitiveness advantages, and the shipment scale is expected to maintain rapid growth.
Investment suggestion: Based on its own R & D advantages, the company is committed to the customized R & D of intelligent modules, which is expected to fully grasp the valuable window period of vehicle modules and continuously explore new downstream customers. At the same time, the company benefits from the high prosperity of 5g, alot and FWA markets, and its operating revenue is expected to continue to grow at a high rate. We estimate that the company’s operating revenue from 2021 to 2023 will be 1.845, 2.713 and 3.679 billion yuan, and the net profit will be 115, 199 and 293 million yuan. Considering the growth of the company and the valuation of comparable companies, we give the company 45 times PE in 2022, corresponding to the target market value of 8.94 billion yuan and the target price of 48.6 yuan. For the first time, a “Buy-A” rating is given.
Risk tip: the expansion process of vehicle module customers is less than expected, alot demand is less than expected, and the rise of chip price is more than expected
