Summary of events: on October 23, 2022, the company issued a performance forecast for the first three quarters of 2022. It is estimated that Q1-Q3 will achieve a net profit of 351 million yuan, an increase of 20.42% over the same period last year, and a net profit of 306 million yuan, an increase of 44.00% over the same period last year. Q3 is expected to achieve a net profit of 160 million yuan, an increase of 66.91% over the same period last year, and a net profit of 130 million yuan, an increase of 55.25% over the same period last year.
Under the multiple positive resonance, Q3 profit increases at a high speed.
1) Q3 revenue is expected to maintain a high growth rate. On the one hand, Q2 is affected by the epidemic, part of the company's orders are squeezed and Q3 will be gradually released; on the other hand, benefiting from the high prosperity of overseas fixed network construction, the company's optical access terminal (PON) business maintains rapid growth, while the company vigorously develops emerging markets such as SmarTone and mobile communications, with continuous expansion of business scale and continuous improvement of product matrix.
2) the company's exports account for a relatively high proportion, with 22H1 overseas business accounting for 49.06%, while Q3 RMB has depreciated significantly (according to Wind data, the closing price of the offshore US dollar against RMB on July 1 was 6.70 yuan on September 30, which was 7.14 on September 30). The company has significantly benefited from both exchange rate and gross profit margin.
3) with the normalization of material supply and prices since the second quarter, the superposition company has accelerated the relocation of factories in Vietnam and the transformation of new business plants, continued to expand production and reduce costs, and both gross profit margin and net profit margin have increased.
Innovative businesses such as automotive electronics and sensor closed testing are expected in the future.
1) Automotive Electronics: at the beginning of 22, the company cut into PCBA manufacturing, covering many vehicle manufacturers and Tier1 in intelligent cockpit and ADAS field. The main products include DVR, DMS, central control, instrumentation, streaming media rearview mirror and so on.
According to the 22 mid-year report, the company has obtained more than 10 million of intended orders in the first half of the year, and the trial production of the first project of automotive electronics has been completed and is preparing for mass production in an orderly manner. According to the disclosure of the company's website on October 9, 22, Taicang Tongwei, a wholly owned subsidiary of the company, has passed the IATF16949:2016 automobile quality management system compliance certification, and the company has taken an important step into the automobile industry.
2) Sensor closed testing: the company invested in Shanghai Gongjin Microelectronics in 21 years, focusing on advanced packaging and testing business in the field of smart sensors. According to the 22 mid-year report, the company has signed service contracts with more than 10 sensor design companies, and successfully completed the test scheme development of accelerometers, gyroscopes, magnetometers, barometers, high pressure and temperature and humidity sensors. In the first half of the year, revenue exceeded 2 million and orders on hand reached 7 million. With the completion of the transformation of the Taicang plant, the sensor testing business is expected to achieve mass production this year, and the capacity and revenue scale will be fully released.
Investment suggestion: we believe that the short -, medium-and long-term growth logic of the company is smooth, and in terms of mature business, the company's Netcom business has benefited from the high prosperity of overseas fixed-line network construction, and the customer expansion share of Datong business has increased; breakthroughs in base station communications, private network communications, FWA and other growth businesses have continued; and seed businesses such as automotive electronics and sensor closed testing have made steady progress. It is estimated that the return net profit of the company from 2022 to 2024 is 432 million yuan 578 million yuan respectively, corresponding to the PE multiple of 17pm 13pm 10x, and the valuation center of the company since the listing of A shares is 27 times. Maintain the recommended rating.
Risk hint: the development of innovation business is not as expected; the risk of exchange rate fluctuation; the progress of capacity release is not as expected.