I. Overview of events
Tongda Power announced on the evening of March 11 that it had a deep cooperation with Nanjing Hualei Electronic Engineering Research Institute Co., Ltd. in the field of radar communication equipment, and considered acquiring part of Hualei Electronics in the future. this is a move for Tongda Power to officially set foot in the military radar field and open up a new market space. We believe that the company's profit margins and ROE levels have fallen to the lowest point and will benefit from downstream expansion such as electric vehicles and elevators, wind power recovery, international strategy and stable raw material prices, as well as upward inflection points and upward flexibility. As this cooperation is still difficult to evaluate short-term profits, the profit forecasts for 14-15 years with EPS of 0.19 yuan and 0.35 yuan respectively, an increase of 194% and 86% respectively over the same period last year, maintain the "highly recommended" investment rating, and the reasonable valuation is raised to 13-15 yuan.
II. Analysis and judgment
The radar market is estimated to be 3-40 billion in 2013, and CGAR will exceed 20% in the next 5-10 years.
Radar is mainly used for early warning radar, search and warning, guidance and command, altimetry, battlefield surveillance, airborne, meteorological, navigation control, navigation and so on.
The radar industry is still in its early stages of growth in China, and its compound growth rate will exceed 20% in the next five years:
(1) the international situation and the stage of domestic development have decided that investment in national defense will continue to increase in the next few years.
(2) General aviation is about to make substantial progress, the construction and application of Beidou system will also enter the harvest period, and there will be a large number of new and replacement requirements for radar.
Cooperate with Nanjing Hualei to set foot in the field of military radar, and will consider acquiring some shares in the future.
Nanjing Hualei Electronic Engineering Research Institute Co., Ltd., founded in 2000, is located in Nanjing, the birthplace of radar in China. It is a private company founded by 14, 38 and other experts. Its main business is the development, production and sales of radar equipment. It has strong scientific research strength and product development ability. Hualei Electronics is mainly responsible for the development and production of radar equipment and important subsystems such as antennas, feeders, solid-state transmitters and receivers for various uses. Power synthesizers, power distributors, various new microwave ferrite devices, various power circulators, phase shifters, multi-channel high-frequency rotating hinges and so on have been successfully developed. Hualei Electronics has a team of researchers and senior engineers with profound theory and rich practical experience in the field of radar equipment development, and has extensive exchanges and cooperation with famous domestic academies and factories. Has four complete military qualifications, and has a number of successful application experience.
Tongda Power has an asset-liability ratio of 20%, has a capital base for transformation, and has a strong demand for transformation of emerging and high-end technologies. This cooperation with Hualei Electronics is expected to make full cooperation in market development and product development in the short term, and some equity acquisitions will not be ruled out in the future, indicating that the company will transform into the military radar field, and the future prospect is worth looking forward to.
14 and 38 under the China Electronic Science and Technology Group are the main domestic military radar production units, but with the increasing openness of the people to join the army, Hualei Electronics and other private companies will have a bright future. At the same time, the company will also fully benefit from the great development in the fields of Beidou construction and general aviation.
Become a supplier of BYD electric vehicles, the automobile motor market brings new increments to the main business.
