The performance in 2021 was in line with expectations, and the performance of 2022Q1 increased steadily. In 2021, the company achieved revenue of 6.553 billion yuan, an increase of 4.09% over the same period last year, a net profit of 141 million yuan, an increase of 47.04% over the same period last year, and a net profit of 120 million yuan, an increase of 144.47% over the same period last year. 2022Q1, the company achieved revenue of 1.173 billion yuan, an increase of 2.75% over the same period last year; net profit of 19 million yuan, an increase of 3.81% over the same period last year; and net profit of 18 million yuan, an increase of 68.68% over the same period last year. During the reporting period, thanks to the high demand for constant temperature crystal oscillator driven by the promotion of the operator's 5G network construction and the steady growth of the PCB industry, the company achieved rapid performance growth through point-to-point market breakthroughs. The company gives full play to its dominant position in the subdivision industry, the reform continues to advance, and the comprehensive competitiveness and market share are expected to be further enhanced.

The three major businesses make concerted efforts to expand various applications, and Dongfeng in the time-frequency crystal oscillator industry helps to improve its performance. The company's business focuses on public network communications, private network communications and intelligent applications, and intelligent manufacturing, with excellent performance in intelligent control electronic business and integrated circuit business. For the whole of 2021, the revenue of public network communications business (accounting for 21.90%) was 1.435 billion yuan, down 16.11% from the same period last year, and sales decreased by 64.52% over the same period last year, due to the reduction of low value-added sales. The company provides telecommunications network consulting and other services for telecom operators, network planning and network excellence continues to maintain a leading position in the industry, and the order for government-enterprise information planning and design has exceeded 100 million yuan. The company entered the Sichuan market of China Mobile, greatly expanded the market share of China Mobile in Guangdong Province and China Unicom Jilin Province, and made a breakthrough in the broadband business of its subsidiaries in Myanmar, exceeding 100000 registered users. The company will comply with the development tide of equipment products brought about by 5G network construction, deeply cultivate operators, and continue to consolidate market share. The revenue of private network communication and intelligent application business (accounting for 58.86%) was 3.857 billion yuan, an increase of 9.02% over the same period last year. The company maintains the first market share in the urban rail transit industry, and has won a number of provincial projects in sub-industries such as emergency management and electric power, and continues to maintain a leading position in the market segment. As the scale of the intelligent water market will reach 80 billion yuan during the 14th five-year Plan period, the company will actively expand the information field of the intelligent water irrigation area and achieve substantial cooperation in the digital park business. At the same time, under the development of intelligent city rail and the perception of IoT, the performance is expected to be further improved by further promoting intelligent applications. The revenue of smart manufacturing business (19.24%) was 1.261 billion yuan, an increase of 20.39% over the same period last year. Benefiting from the opportunity of localization of devices, the demand for constant temperature crystal oscillator has increased significantly, the company has expanded its market share and achieved high performance. The inventory of intelligent manufacturing was 288 million yuan, an increase of 36.78% over the same period last year, due to the preparation of orders at the end of the reporting period. The company expands its production capacity and plans to achieve time-frequency category expansion through research and development, while expanding its business in special areas such as aerospace. The company has a prominent advantage in applying for 100 patents throughout the year, and is expected to maintain a leading position in market segmentation and bring marginal improvement in performance.

State-owned enterprise reform companies are expected to continue to benefit, equity incentives to promote marginal performance improvement. With the acceleration of the reform of state-owned enterprises, China Electric Asset Securitization has ushered in a new space, the reform dividend of subordinate listed companies is expected to be further highlighted, and the company's main business scale is expected to expand to promote sustainable development. The annual equity incentive cost of the company is 15.9281 million yuan, of which a high proportion of equity incentives for core technical personnel is expected to contribute to the sustainable development of the company. We are optimistic about the high growth trend of the company in the future. Combined with the company's 2021 results, we give the company 2022E-2024E annual return net profit forecast value of 219 million yuan, 275 million yuan, 331 million yuan, corresponding to EPS 0.32 yuan, 0.40 yuan, 0.48 yuan, corresponding to PE 75.99 times, 60.46 times, 50.26 times, give a "cautious recommendation" rating.

Risk tips: the impact of the global epidemic and foreign policy uncertainty; the risk of rising raw material costs; the risk of foreign currency exchange rate fluctuations.