Events:

The company has recently released a number of bid-winning information, as follows:

At the same time, the company has recently announced the winning of a number of projects, important orders include:

1) March 10 announced the signing of a 2022 framework contract for emergency procurement of smart home gateways with Zhejiang Mobile. The purchased products include GPON- dual-band WiFi5 smart home gateways and GPON- dual-band WiFi6 smart home gateways. The maximum amount of tax included in the contract is 35.2554 million yuan.

2) March 7 announcement signed with Hebei Mobile 2022 no WIFI no voice intelligent home gateway procurement framework contract, the upper limit of the contract tax amount is 37.5002 million yuan; 3) March 7 announcement pre-bid Shanghai Mobile 2022 no voice intelligent home gateway procurement, the winning bid share is 40%, the bid winning amount is expected to be about 4064-56.64 million yuan

4) the announcement on February 28 predicted that Hubei Mobile had no WiFi intelligent gateway procurement in 2022, and the company was the second winning candidate, and the winning amount was expected to be about 62.4 million yuan (including tax). 5) on February 21, the announcement signed a multi-band (including 700m) antenna product collection framework agreement with the provincial and municipal companies of China Mobile Group. The 444 antenna and single 4 antenna company's share of bid package 1 was 10.14%, and the estimated amount of winning bid excluding tax was 153 million yuan. The 4448 antenna company's share of bid package 2 is 11.59%, and it is estimated that the amount excluding tax in winning the bid is 514 million yuan.

Our comments are as follows:

Driven by the digital economy and gigabit broadband policy, smart home business is developing rapidly, Shenzhen Zhaoneng orders continue to land, and the future growth momentum is strong.

The main customers of the company's smart home business are the main domestic communication operators. Shenzhen Zhaoneng has many advantages, such as high-quality products, perfect marketing service network, years of product development and operation experience, technical level and so on. Has grown into one of the major suppliers of communication operators. By the end of 2020, Shenzhen Zhaoneng had won the bid for about 4.8 billion of the bid and about 2.5 billion of the outstanding orders. In the first half of 21, Shenzhen Zhaoneng added about 2.476 billion yuan of smart family business orders in 21 years, and last year's unexecuted orders and new orders are still rapidly and gradually landing, laying the foundation for the growth of the company's smart family business.

The fixed increment strengthens the 5G end-to-end product layout, wins the bid 5G antenna single, and is expected to continue to break through in the future.

In the early stage, the company completed the fixed increase, with a net fund-raising of 569 million yuan and an issue price of 38.70 yuan per share, focusing on the expansion of 5G wireless access network core products, new generation bearer network products, R & D center construction and supplementary liquidity. Recently, the company signed a framework contract for centralized procurement of China Mobile Limited multi-band (including 700m) antenna products, and the two bid packages won a good share, with a total winning amount of about 667 million yuan. the project was a joint tender conducted by China Mobile Limited on behalf of China Radio and Television and China Mobile Limited. The winning bid helped the company successfully enter the mobile and radio and television 5G equipment market, helping the company to further open 5G communications equipment business.

Mobile reading business content, channels double expansion, the future is expected to grow steadily.

In terms of content business, the company's own reading platform continues to incubate and fission. As of the first half of 2021, the company has more than 60000 copies of all kinds of high-quality text reading products and more than 37000 original works contracted by authors. In terms of channels, the company has a wide range of content distribution channels, including free operating platforms such as overread novels and box novels, self-operated new media accounts such as Wechat and Weibo Corp, as well as communication operators and reading platforms, terminal manufacturers' reading platforms and so on. At the same time, the company uses the CPS model to open an one-stop operating platform and content support for a large number of self-media to accelerate the layout of the new media field. At present, the company has nearly 50 million Wechat fan matrix. Content + channels continue to expand, and the reading business is expected to grow steadily.

Investment advice and profit forecast

The company's mobile reading has a deep accumulation and is expected to grow steadily in the future. The layout of the communications sector has continued to improve, with the subsidiary Shenzhen Zhaoneng actively laying out smart families and the 5G communications market, and driven by policies such as the digital economy and gigabit broadband, the company has signed a multi-band (including 700m) antenna framework contract with China Mobile to substantially cut into the 5G equipment market and open up room for future growth. Due to the higher-than-expected business development of the company, the net profit of the company in 2021-2023 was adjusted from 3.10,3.88 and 487 million yuan to 3.10,4.34 and 532 million yuan respectively, corresponding to a price-to-earnings ratio of 15 times and 12 times earnings in 22-23 years.

Risk hint: the progress of order execution and recognition revenue is slower than expected, the development of the industry is slower than expected, the risk of market competition, the actual winning situation and amount of the framework and pre-winning contract are subject to the final contract.