To achieve holding Wuhan Navigation Institute, plus Beidou No. 3 chip business. The company recently announced that its subsidiary, Changsha Shaoguang, has completed the acquisition of 16% of the shares in Wuhan Navigation Institute, and has so far acquired 43.66% of its shares, making it its largest shareholder. Wuhan Navigation Institute is mainly engaged in the R & D and design of Beidou chip. It has an academician-led expert team and strong technical strength. It has a self-developed Beidou 3 baseband RF integrated chip. The company has realized the holding of Wuhan Navigation Institute, on the one hand, it has realized the expansion of the company's chip business to the field of Beidou, and can give full play to the synergy between the two in chip technology, industry and market. At present, the Beidou 3 system has been officially launched, and the company is expected to fully share its market dividend; on the other hand, this acquisition is a joint auction with Poly, which will help to expand the overseas project Beidou III.
To create a "chip + communication" ecological chain, the plate shows a high growth trend. The company's military electronics business to Changsha Shaoguang and Weike Electronics as the main body, respectively formed a high-end core chip and communications plate two major industrial areas. The revenue and net profit of 2020Q1's electronics sector increased by 62.4% and 87.5% respectively compared with the same period last year, showing a high growth trend. Recently, the company disclosed in the investor interactive platform that the high-performance graphics processing chip SG6931 has achieved mass production. Be optimistic about the development of the company's military electronic business.
The extension of the chairman's plan to increase the holdings shows confidence in development. The company announced a few days ago that the period of the chairman's plan to increase holdings has been extended by 6 months to February 3, 2021. Due to the window period, the chairman's previous plan to increase the company's shares by 30 million yuan to 50 million yuan has not yet been completed, with a cumulative increase of 697000 shares so far, with an amount of about 17.86 million yuan. The extension of the holding plan demonstrates the confidence of senior executives in the company's development prospects.
Profit forecast and investment rating: maintain the overweight rating. The company's military electronics business is growing at a high speed, and it continues to increase the layout and win orders. Recently realized the holding of Wuhan Navigation Institute, plus Beidou chip business, Beidou No. 3 system has been officially launched, the company is expected to fully share the market dividend. It is estimated that the net profit from 2020 to 2021 is 439 million yuan, 526 million yuan and 633 million yuan respectively, the corresponding EPS is 0.64,0.76 yuan and 0.92 yuan respectively, and the corresponding share price PE is 37 times, 31 times and 26 times respectively.
Risk tips: 1) Beidou 3 related business progress is lower than expected; 2) market expansion is not as expected; 3) chemical business decline risk; 4) systemic risk.
