Summary of the report:
Continue to carry out extension mergers and acquisitions to promote sustained performance growth
In recent years, the company has continuously laid out the military electronic industry chain through the acquisition of science and technology, Chengdu Eckert, Xi'an Qiwei Technology, Suzhou Bohai Entrepreneurship and Hengda Microwave. at present, it has formed a radar system, satellite applications, intelligent ammunition, security storage and intelligent network connection and other business groups. In 2020, the company acquired Xi'an Hengda and Suzhou Hengda in the form of private shares, convertible bonds and cash, further strengthening the company's layout in the microwave field.
Growth point 1: the company's radar business is developing rapidly. The radar business income of the leading civil and military radar companies mainly comes from military radar products, including millimeter wave special radar systems, phased array radar systems and other military radar products. It is estimated that by 2025, the scale of China's military radar market will maintain a growth rate of about 11%. The company's military radar products have begun to enter batch production and are expected to achieve rapid growth in the future. In terms of civil radar, the company's vehicle millimeter wave radar is the only domestic cooperative manufacturer of Baidu, Inc. Apollo program. With the rapid development of intelligent vehicle ADAS system, the company's civil radar is expected to achieve a breakthrough.
The second growth point: the advantage in the field of remote sensing is remarkable, and the development prospect of Beidou navigation is promising. The company's satellite application fields mainly include remote sensing measurement and control and Beidou navigation. The company's on-board real-time processing technology has significant advantages, especially the SAR real-time processing equipment fills the gap in this field at home and abroad. The company in the field of remote sensing satellite is studying 12 projects, with an expected output value of 500 million yuan in three years. The company has successfully developed core baseband processing chips, Beidou series modules and Beidou series machines, and the products are mainly for military use. With the promotion of Beidou 3 network and satellite communication construction, the company's satellite application field is expected to develop rapidly.
Growth point 3: the demand for intelligent ammunition increases, and the intelligent ammunition business of the safe Storage and stable Development Company includes all kinds of seeker, on-board computer and other products. At present, the demand for ammunition in actual combat training is increasing. The company's intelligent ammunition field is expected to enter the fast track of development. The company's security storage business includes military, industrial control and consumer solid state disk, the development of the military field is stable, and the civilian side is expected to become a storage supplier of the party, government and military office system.
Investment suggestion
The company continues to develop in the field of military electronics, and forms a strong competitiveness in the fields of radar, satellite, intelligent ammunition and secure storage. We are optimistic about the long-term development of the company. It is estimated that the EPS of the company in 2020-2022 is 0.19,0.25,0.31 yuan respectively, corresponding to the PE of 39X, 30X and 24x, the average valuation of the comparable company is 67X, covering for the first time, and given a "recommended" rating.
Risk hint
1, the company has a high goodwill; 2, the defense budget growth is not as expected; 3, the business integration can not achieve synergy.