Veteran military electronics enterprises, the first camp of microwave components. The company, formerly known as Sunbird, issued shares at 12.95 yuan per share in 2017 and bought 97.38 percent of Yaguang Electronics at a price of 3.342 billion yuan. From then on, it has entered the field of military electronics, and the dual main business of boat and military industry is in operation. Yaguang Electronics, the former state-owned 970 factory, is one of the largest military industrial enterprises of microwave semiconductor devices and microwave circuits in China, in the first echelon of the industry, with a leading technical level, and a complete product spectrum in the microwave field of the company. it is currently the largest military RF chip and components development enterprise among the listed companies in China. It covers a wide range of users, and its revenue volume and profit scale are significantly higher than those of other companies. It is a domestic scarce platform-type established military industrial enterprise.
Benefit from satellite Internet constellation, missile-borne industry boom, full of orders, production expansion is just around the corner. The downstream customers of the company cover a wide range of customers, all of which are the scientific research institutes and related factories of the military industrial group, and the products basically cover the leading complete machine institutes in all sub-fields. Downstream products are used in spaceborne, airborne, shipborne, missile-borne and ground platform radars.
Leo satellite constellation is booming, and the company is actively expanding its production capacity to cope with the bursting demand in the satellite field. Satellite Internet business is expected to break out in the next three years. According to the constellation plan built by the national team that we have summarized and publicly disclosed, 1000 constellations are expected to be launched in the next three years, with an average of more than 300s per year. According to the company's current matching amount, it is estimated that the order for new satellite supporting business is very large, and it is expected to create another Chengdu Yaguang. The company's existing production capacity has been seriously insufficient and is now gradually expanding production.
Benefiting from the increase of missile strategic reserve and the pull of actual combat training, the company's missile-borne microwave business has entered the fast lane. The company and 25 institutes of the second Institute of Aerospace Science and Industry have jointly built the "Joint Laboratory of Microwave High density Integrated Technology". The second Institute of Aerospace Science and Industry is China's largest air-space defense missile development and production unit, the cradle of China's missile industry, and the 25 key institutes in the field of precision guidance in China.
The year 2020 is the sprint year of the 13th five-year Plan of China's weapons and equipment construction, the order volume is expected to be large, and the accumulated orders are expected to be concentrated. In the medium and long term, the strategic cooperation model between the company and the 25 institutes of the second Hospital deeply binds the company's customer channels and grafts the demand for medium-and long-term development orders.
Capacity expansion is imminent, and high growth can be expected. In June 2020, the company announced that it intends to raise funds through the public issuance of convertible corporate bonds, which will be mainly invested in the production expansion and technological renovation projects of the company's electronic business, in order to meet the blowout needs of customers and consolidate the company's position in the industry. further enhance the company's comprehensive R & D strength, core competitiveness and sustainable profitability.
In addition, the company's microwave chips are developing rapidly, and 5G construction is expected to open up more civil space for the company's microwave components. Asia Optoelectronics began chip design in 2008, established its subsidiary Huaguang Ruixin in 2010, and jointly invested in gallium arsenide, gallium nitride and other material chip production lines with San'an Optoelectronics in 2014. Huaguang Ruixin's main products are gallium arsenide, gallium nitride, silicon germanium series microwave radio frequency and high-speed analog chips, with frequency coverage up to 100GHZ, with wide frequency band, low power consumption, high integration, low cost, short shipping cycle and other unique advantages, mainly used in 5G, wireless communications, automotive electronics and Internet of things applications. In 2019, the company's export chips grew rapidly, the export customers of self-research chips in Yaguang Electronics increased from 7 in 2018 to more than 100, and the number of sales models increased from 36 in 2018 to nearly 200. Huaguang Ruixin self-research chip shipments also increased by 196% in 2019 compared with the same period last year. With the expansion of 5G communication to the high frequency band, the degree of civil-military integration of microwave components is expected to continue to improve. In the early days, Asia Optoelectronics actively laid out the field of 5G communications. In 2018, it began to develop a series of power amplifier chips for 5G, radar and satellite, and established cooperation with Huawei and ZTE.
Domestic composite boat leader, boat business has been gradually improved. The boat business is the original business of the parent company, and the company is the leading system solution provider of all-material yachts, commercial boats and special boats in China. at the same time, it is one of the composite boat enterprises with the largest scale, the highest level of design and R & D technology and the most complete variety and structure in China. Due to the impact of the economic downturn and the shipping market depression, the weak demand in the shipping market and the suspension of a large number of tenders by the maritime police in the early stage, the performance has been suppressed in recent years and is expected to improve gradually.
The equity incentive scheme demonstrates the company's confidence in development. On January 16, 2020, the company issued 2020 stock options and restricted stock incentive plan (draft), which accounted for 5.16% of the company's total share capital at the time of the plan announcement. Among them, the assessment index of stock option is that the revenue growth rate from 2020 to 2022 is not less than 30%, 40% and 50% respectively (based on 2018), which realizes the binding of the company's interests and demonstrates the company's confidence in future performance growth.
Investment suggestion: military electronics business is the biggest bright spot and growth point of the company's business, the company is in the first echelon of the domestic microwave component industry, benefiting from the rapid development of weapons and equipment construction and the acceleration of domestic substitution process. It is estimated that the net profit of the company in 2020-2022 is 3.50,0.46 and 603 million yuan respectively, and the EPS is 0.35,0.46,0.60 yuan respectively.
Risk hint: the development of boat business is not as expected; military orders are lower than expected.
