Event: the company announced on August 17 that the revenue of H1 in 2021 was 169 million yuan (+ 42.73%), the net profit was 48 million yuan (+ 45.44%), the net profit was 43 million yuan (+ 30.60%), the gross profit was 61.1% (- 11.37pcts), and the net profit was 28.37% (+ 0.62pcts).
Main points of investment:
The company's revenue from satellite navigation products has doubled, and Nanjing fluorescent combined watch and business collaboration are expected to thicken the company's future performance.
During the reporting period, the company's sales orders increased, achieving operating income of 169 million yuan (+ 42.73%) and net profit of 48 million yuan (+ 46.53%). It is worth noting that due to changes in income structure, the company's gross profit margin (61.10% mam 11.37pcts) decreased significantly. However, the company's net interest rate (28.37% minus 0.62 pcts) still maintained a certain growth, which we believe is mainly due to a significant decrease in the company's three fee rates (15.21% qiang 5.64 pcts) and a significant increase in the company's government subsidy (7.6096 million yuan, + 2905.67%) during the reporting period.
Specifically, in terms of the company's two major businesses of satellite navigation products and satellite communications products, during the reporting period, the company's satellite navigation products business income (126 million yuan, + 118.72%) doubled, the company satellite navigation related products business main body Mengsheng technology (wholly-owned subsidiary) income (133 million yuan) and net profit (49 million yuan) increased by 50.7% and 59.36% compared with 2019H1, respectively. The business income of the company's satellite communications products (43 million yuan,-29.00%) declined, mainly due to the influence of COVID-19 's epidemic situation, the company's overseas income decreased significantly compared with the same period last year, and Guowei Communications, a subsidiary of the company engaged in satellite communications business, was in a state of loss. As a result, we believe that the epidemic may still have an impact on the performance of the company's satellite communications products throughout 2021, and that the company's satellite navigation products business may be the main driver of the company's overall revenue and profit growth in 2021.
In addition, through capital increase and equity transfer, the company has obtained the controlling stake of the subsidiary Nanjing firefly, the research and development of satellite communication and wireless ad hoc network communication system and technical services of Nanjing firefly. Technical exchange will help the company to realize the rapid evolution of products from antennas to terminals and systems. At the same time, it will also be conducive to the company's layout, development of satellite Internet and wireless ad hoc network markets, and broaden the scope of business. Further enhance market competitiveness and profitability. During the reporting period, affected by the consolidation date of May 31, the net profit after the consolidation of Nanjing firefly was only 324600 yuan, accounting for a small proportion of the company's 2021H1 net profit. Referring to the compound growth rate of income and net profit of Nanjing firefly from 2018 to 2020 is as high as 52.18% and 554.54%, at the same time, Nanjing firefly's income in 2021Q1 has accounted for 85.72% of its 2020, and the scale of net profit has exceeded the level of the whole year of 2020. We believe that Nanjing fiery is in a period of rapid growth. According to the company announcement, Nanjing fluorescent's net profit performance commitment for 2021-2023 is 13 million yuan, 14 million yuan and 18 million yuan respectively. We judge that Nanjing fluorescent will increase its contribution to the company's net profit in the second half of the year. at the same time, it will contribute to the growth of the company's income and net profit from 2022 to 2023.
The scale of the company's R & D personnel has significantly expanded, and the growth of inventory and other financial data highlights the sufficient expenses of the company's orders. during the reporting period, under the background of the rapid growth of the company's income, the company's management expense rate (12.73% score 3.18pcts) increased to a certain extent, mainly due to the increase in the salary of the company's staff, hospitality expenses for various consulting services, travel and other expenses. The rate of sales expenses of the company (5.69% mahjong 5.12pcts) decreased significantly, mainly due to the decrease in overseas business affected by the epidemic and the corresponding reduction in commission payment. The company's R & D expenditure rate (15.16% focus 0.49pcts) has increased, mainly due to the increase in the company's research and development tasks, and the increase in staff salaries, technical service fees and travel expenses over the previous year. At the same time, the number of R & D personnel in the company (139, + 43.30%; if deducting the influence of Nanjing fluorescent and table increased by 9, 130, + 34.02%) also increased significantly.
In other financial data, the net cash flow of the company's operating activities (- 53 million yuan) decreased by 14 million yuan compared with the same period last year, mainly due to a large increase in cash paid for purchases in the current period compared with the previous year. At the same time, the company's inventory (123 million yuan, + 58.16%) of raw materials (52 million yuan, + 83.38%), prepayments (17 million yuan, + 333.12%) and notes payable (130 million yuan) + 44.93%) and other significant growth, reflecting the company's orders or sufficient, is actively purchasing and preparing goods, and is expected to be realized to the company's performance in the future.
In addition, according to the disclosure of the company, of the funds raised by the company, 169 million yuan will be invested in the industrialization project of satellite navigation products, and 176 million yuan will be used in the industrialization project of satellite communications products. The construction period of the project is two years, among which, the industrialization project of satellite navigation products will increase the company's annual income by 113 million yuan and the total profit by 33 million yuan, and the industrialization project of satellite communication products will add 220 million yuan to the company's annual income and 31 million yuan in total profits. the two add up to 333 million yuan in income and 64 million yuan in profits. It accounts for 78.68% and 51.12% of the company's total revenue and profit in 2020, respectively. It is worth noting that the gross profit margin of the company's satellite navigation product industrialization project and satellite communication product industrialization project is 56.47% and 40.73% respectively. Although it is lower than the gross profit margin of the company's satellite navigation products business (67.50%) and satellite communication products business (55.64%) in 2020, it can still maintain a high level.
Satellite navigation products are expected to constitute the main revenue growth point of the company's "14th five-year Plan". At the same time, the company has continued to focus on the R & D and manufacture of related products in the field of satellite application technology since its inception. Is a satellite navigation and satellite communications terminal equipment research and development, manufacturing, sales and technical services of high-tech enterprises, the main products include satellite navigation, satellite communications and other products.
1 satellite navigation products
The company's satellite navigation products are mainly navigation terminal equipment and core components based on Beidou satellite navigation system, such as satellite navigation receivers, components, special test equipment, etc., which are mainly used in the field of national defense and military. During the reporting period, the technical characteristics of the company's satellite navigation products continued to improve, and the products developed from the module to the whole machine and then to the system.
We believe that with the current military stepping up actual combat exercises, actual combat training leads to increased attrition, and the demand for war preparation brings rapid improvement and replenishment of weapons and equipment, the demand for missiles and other weapons and equipment will also increase rapidly. In recent years, the company has completed a number of satellite navigation products and entered the stage of mass production, we judge that the company's satellite navigation products will be a more deterministic revenue growth point during the 14th five-year Plan period.
2 satellite communication products
Satellite communication products are mainly satellite communication antennas and components, including mobile antennas, beacons and tracking receivers, which are mainly used in maritime and aviation markets.
In the marine field, the company's satellite communication products are mainly sold in the domestic marine market, while the products sold abroad are mainly sold sporadically. Therefore, the company's satellite communication products have not continuously participated in the competition in the overseas marine market. In the aviation field, the company's airborne satellite communication products have not been expanded in the domestic civil aviation market and cannot enter the "front-loading" market in the short and medium term, while the domestic "afterloading" market is still in the experimental stage. The core components of the company's satellite communication products are independent design and production, and the products have the characteristics of high compatibility and integration of the antenna system and high reliability. The products can maintain accurate tracking of satellite signals, establish and maintain continuous and reliable satellite communications under extreme conditions, and have stable signal connections and good performance under various working conditions.
We believe that at present, the company's satellite communication products are mainly domestic marine ship satellite communication terminal products and overseas aviation satellite communication products. Affected by the uncertainty of the improvement of the epidemic situation abroad, the revenue growth of the company's satellite communications products may rely more on the domestic marine ship satellite communications market in the short term. According to Zhang Yan, general manager of SinoSatong, a subsidiary of China's high-orbit satellite communication operator, Zhang Yan, China Satcom's marine application integrated information service platform has realized Ka+Ku resource fusion network operation. The APP2.0 version of 'Haisintong' has enhanced a variety of application capabilities, and the number of ships on the network has exceeded 7000, while in March 2020, Aerospace Science and Technology Group disclosed SinoSat's "Hai Xingtong" business. To provide satellite broadband communications integrated services for 6000 Chinese ships and offshore platforms, it can be seen that the downstream demand of marine satellite communications in China is growing steadily. On the other hand, the market demand of aviation satellite communications in China is also expected to grow gradually under the commercial first flight of China Satcom's domestic Ka broadband aircraft. In the above domestic marine and aviation satellite communications downstream demand is gradually growing, the company is located in the satellite communication terminal equipment domestic market demand is expected to gradually increase. In addition, if the overseas epidemic situation improves in the future, the performance of the company's overseas satellite communications products is also expected to achieve restorative growth.
In addition, during the reporting period, the company has taken electronic countermeasures as the strategic development direction of the company's business, set up the electronic countermeasures division, and increased the investment of resources in market development, technology development, talent introduction and other aspects. we will actively distribute electronic countermeasures technologies that are highly homologous to existing technologies. Combined with the company's current 120 million yuan investment in research projects, there are a number of electronic countermeasures projects in the technological development stage, we judge that the company's electronic countermeasures business is expected to bring new revenue and profit growth points for the company in the middle and later stages of the 14th five-year Plan.
Investment suggestion
1. The company's revenue from satellite navigation products doubled in the first half of 2021, and with the current military stepping up actual combat exercises, actual combat training leads to increased attrition, and the demand for war preparation brings rapid improvement and replenishment of weapons and equipment. the demand for missiles and other weapons and equipment will also grow rapidly. In recent years, the company has completed the finalization of a number of satellite navigation products and entered the stage of mass production. We judge that the company's satellite navigation products will be a more deterministic revenue growth point during the 14th five-year Plan period.
two。 With the gradual growth of domestic demand for marine and aeronautical satellite communications downstream, the domestic market demand for satellite communication terminal equipment where the company is located is expected to increase gradually. At the same time, if the overseas epidemic situation improves in the future, the performance of the company's overseas satellite communications products is also expected to achieve restorative growth.
3. The company began to lay out the field of electronic countermeasures, which is expected to bring new revenue and profit growth points for the company in the middle and later period of the 14th five-year Plan.
4. The company's newly consolidated Nanjing fluorescent will increase its contribution to the company's net profit in the second half of the year, and will contribute to the growth of the company's revenue and net profit from 2022 to 2023.
Based on the above point of view, we estimate that the operating income of the company from 2021 to 2023 is 604 million yuan, 811 million yuan and 1.182 billion yuan respectively, the net profit from the parent is 149 million yuan, 193 million yuan and 267 million yuan respectively, and the EPS is 1.30,1.69,2.33 yuan respectively. We give the buy rating, the target price is 85.00yuan, corresponding to 65 times, 50 times and 36 times of PE in 2021-2023, respectively.
Risk tips: the risk of high customer concentration; the risk that the expansion of the company's satellite communications products is not as expected; the risk of overseas sales.
