Domestic RF testing equipment leader, 5G shielding box has become a qualified supplier of Qualcomm Inc.
1) the company was founded in 2005, the initial stage to ICT and other testing equipment, the main customers include Cisco Systems and Dell. It was certified by Apple Inc as a qualified supplier in 2010, providing it with mobile antenna radio frequency testing equipment, and its business has gradually extended from electrical testing to acoustics and radio frequency testing. The company's ICT test equipment technology is in the leading level in the world, and the advanced layout of 5G RF testing equipment, 5G test shielding box in 2018 has become a qualified supplier of Qualcomm Inc, according to the company's prospectus, 2018-2019 has Qualcomm Inc batch sales record, extremely scarce.
2) the company is a testing solution provider (with automatic assembly business) integrating radio frequency, acoustics, electricity, optics and visual inspection, with outstanding profitability and a gross profit margin of about 50%. And the core business-acoustics and radio frequency testing equipment gross profit margin as high as 57%, far higher than the average level of the automation industry, highlighting technical barriers. As the proportion of the company's RF test equipment sales continues to increase, the company's product moat will continue to expand, and profitability is expected to be further strengthened.
5G process + 3C recovery, the company's testing and assembly equipment is expected to fully benefit.
The main contents are as follows: 1) the radio frequency testing equipment is mainly composed of test instrument, shielding box, test software and so on. In the 5G era, RF testing is becoming more and more important, and the use of large-scale antenna array technology makes the difficulty and time of RF performance testing in the 5G era geometrically more than that in the LTE era, while the antenna testing must be completed in the shielding box, so there will be a lot of demand for the shielding box. The company's 5G high isolation technology has been applied to the 5G test shielding box, and the products have achieved small batch production, which is expected to usher in a surge in demand.
2) the outbreak of demand for wearable devices represented by TWS headphones leads the recovery of 3C industry. At the module equipment level, the traditional headphone production line and testing and assembly equipment are not suitable for the production and assembly of TWS headphones, and new production lines and equipment are needed, which leads to the demand of related module testing and assembly equipment.
3) related equipment market space: the global market size of ① RF test equipment is US $2.32 billion in 2016 and is expected to reach US $3.21 billion by 2023. In terms of shielding boxes, it is estimated that the steady-state market space of 4G and 5G shielding boxes is 400 million yuan / year and 3.2 billion yuan / year respectively (only considering Sub-6GHz applications); in terms of ② 3C testing and assembly production line, from 2020 to 2021, the corresponding production line equipment demand for new 5G mobile phones, TWS headphones and smartwatches is 63.6 billion yuan.
Radio frequency detection is expected to become a bright spot, and the development of standard Keysight is expected.
1) at present, the company's customers are mainly concentrated in the field of consumer electronics, and its products are mainly for the top customers in the industry. The downstream customers of the company are mainly Apple Inc, Cisco Systems, Microsoft Corp and other well-known enterprises, of which Apple Inc has been the company's largest customer for many years; 5G shielded box has become a qualified supplier of Qualcomm Inc.
2) the company cut into the field of RF testing earlier, mainly engaged in the development and application of shielding boxes. At present, the shielded box market is still dominated by foreign brands, such as Agilent and Rod Schwartz. Berger shares have a number of shielding box patents, deep technical reserves, and have the core technology in the 5G test shielding box, and the products have been sold.
3) the company's testing equipment covers five major testing areas: radio frequency, sound, electricity, light and vision, and is expected to become a top testing equipment provider. Take consumer electronics as an example, with the promotion of wearable devices and 5G applications, the number and accuracy of detection indicators have increased exponentially, thus significantly driving the demand for related test equipment. Overseas Keysight (Agilent wholly-owned subsidiary, whose main business is radio frequency test and measurement equipment), whose revenue reached US $4.3 billion in 2019, its development path provides a reference dimension for Bojie's future development.
Cover for the first time, giving a "buy" rating. The company has released its performance, KuaiBao, with a net profit of 150 million yuan in 2019, of which the net profit in the fourth quarter was 18 million yuan, a sharp increase of 120% over the same period last year. The company is the leader of domestic RF testing equipment, ahead of the layout of 5G RF testing equipment, is expected to fully benefit from the 5G process. In addition, the outbreak of the wearable device market continues to lead the recovery of the 3C industry, which will significantly drive the demand for related testing and assembly equipment, thus supporting the company's performance growth. Standard global test equipment leader Keysight, the company has more room for growth. It is estimated that the return net profit of the company from 2019 to 2021 is 1.50,2.40 and 396 million yuan, and the corresponding PE is 49,41,25 times respectively. Give the company a "buy" rating.
Risk hints: 5G process is not as expected, 3C industry recovery is not as expected, market competition risk, downstream customers are more concentrated risk, export income accounts for a larger risk, market scale is not as expected.