This report is read as follows:
The company has ploughed the field of communication optical cable for many years, stripped outside and inside to deepen the reform, 5G commercial has been rolled out in an all-round way, and the company's "communication + security" joint development, the performance is expected to exceed expectations.
Main points of investment:
For the first time, it is given a rating of "prudent overholdings". It is estimated that the net profit of the company from 2019 to 2021 is 179 million yuan, 227 million yuan and 334 million yuan, and the corresponding EPS is 0.14,0.18,0.26 yuan. Referring to the two valuation methods of PE and APV, we give the company 52 times the PE valuation level in 2019, corresponding to the target price of 7.28 yuan, covering it for the first time and giving it a "prudent overweight" rating.
5G commercial expansion of the Internet of everything is unstoppable, and the surge in demand for "optical" communications is expected to lead to better-than-expected future performance. The technical value of 5G lies in the industry application, and the key of the industry application lies in the Internet of everything. The company is steady in the optical fiber and cable business, while making efforts to develop the 5G optical transmission business and actively expand the communication "optical" industry chain. With the comprehensive launch of 5G, the demand for the "light" industrial chain will increase significantly, bringing the release of orders in the "light" industrial chain, and the company's future performance is expected to exceed expectations.
External and internal stripping, deepening reform, security business to help performance and valuation rise. The company's strategy focuses on deepening reform, acquiring UTStarcom Holdings Corp, a veteran international communications equipment supplier, and stripping micro-energy technologies that are not closely related to the company's future strategic business internally. At the same time, through the acquisition of Bazhuo network, seize the opportunity of Internet information security. The marginal improvement of the degree of national attention to safety-related business will lead to a double rise in the company's overall performance and valuation, helping the company to create resplendence.
Catalyst: 5G commercial full launch, operator 5G substantial investment.
Risk hint: operator investment is not as expected, trade war brings the risk of industry uncertainty.
