Military radar systems, intelligent ammunition and satellite applications are just around the corner.
Relying on Beijing Institute of Technology, the radar product technology is leading in China, and the military radar market has entered a continuous stage. According to the 2018 annual report, the company cooperated deeply and established a Radar Technology Research Institute with the advantages of science and technology, Qiwei Technology and Suzhou Bohai in the fields of image / laser / radar seeker, storage equipment, RF microsystems, etc. to provide customized and serialized low-cost missile-borne components solutions have been widely used in missiles, guided munitions and other aircraft products, paying attention to the volume rhythm. With its own navigation baseband chip and microwave signal collection technology, the company can provide a series of products such as on-board signal real-time processing and ground raw data preprocessing, and its subsidiary Eckert has a high market share in satellite ground stations. a number of projects under research are about to be launched.
In the field of civil products, the market of automotive radar, safety storage and other products is expected.
According to the 2019 semi-annual report, the company's 77GHz automotive millimeter wave radar has obtained tens of thousands of orders, and it is the only cooperative manufacturer of Baidu, Inc. Apollo program and BYD Dlink project, and has established cooperative business with nearly ten domestic automotive millimeter wave radar manufacturers; and millimeter wave traffic radar is actively participating in the construction of road network monitoring systems in smart cities around the country. The company relies on independent research and development of SSD control chips that support data encryption and decryption, and develops military, industrial control and consumer SSD disks to provide data storage solutions for party, government and military systems. Its independent controllable fibre Channel storage array has been listed in the "military key software and hardware autonomous controllable product list", becoming one of the first enterprises in China to enter the list.
Further improve the layout of the industrial chain through the acquisition of Hengda Microwave
According to the reorganization report, Hengda Microwave has been ploughing the microwave field for more than 20 years, and is committed to the application of radar, satellite communications, 5G communications and other military and civilian fields, with a high degree of coordination with the original business. the company not only accumulates in the field of military products through continuous accumulation of research projects, but also expands to other military industrial groups outside China Electric Power and aerospace systems, with the help of the mass application of 5G communications and the opportunity that the 5G working frequency band belongs to the microwave band. We have successively developed batch orders for microwave antennas from Huawei and ZTE, as well as new customers such as Huaxun Ark, ZW, Bowei Hertz and so on. According to the performance commitment, the net profit from 2019 to 2021 will not be less than 4000 yuan, 5200 yuan and 65 million yuan respectively.
Investment suggestion: the company revolves around the military electronic information technology, after several years of industrial chain integration, the business sector has achieved results, not only the military market radar system, intelligent ammunition, satellite applications, etc., and civilian products millimeter wave radar, secure storage and other areas of market space is expected. We estimate that the company's net profit from 2019 to 2021 is 1.42,2.20 and 312 million yuan respectively, and the corresponding valuation is 79, 51 and 36 times respectively. Cover for the first time, giving a "buy-B" rating.
Risk tips: the pace of further business integration is slow; orders are lower than expected; goodwill accounts for a high proportion