The company's main products are consumer electronics functional parts, composite board covers, wearable components, and cooling components, etc., which are in the middle and upper reaches of the consumer electronics industry chain. The industry's competitive landscape is relatively scattered, but downstream concentration is high (smartphone manufacturer CR6 = 77.1%), and only 2-3 vendors are usually selected for each product.
Therefore, while each manufacturer produces high-quality products, it is also particularly important to bind high-quality customers to advance card slots.
Based on the following three points, we believe that intelligent power is a target with investment value:
(1) Build customer barriers and bind the company to major customers such as Samsung, OPPO, and vivo. These are currently one of the few customers with growth potential and low risk. The major customers mentioned above all have the potential to increase their market share in their respective segments, and the company is also expected to follow the big customers and enjoy the dividends of the 5G era.
(2) There is still a lot of room for improvement in the market share of composite panels as back covers for mid-range and low-end mobile phones. Although the production of composite panels is not as high as consumer electronics components such as chips in terms of technical barriers, gaining competitiveness in the market is very dependent on the manufacturer's experience accumulation and team proficiency. The company took the lead by making early efforts in the field of composite panels. In the future, it still has the ability to increase yield, reduce costs, and increase market share. The composite board business will become the basis for the company's performance.
(3) The cooling module business will be the company's main growth point. Demand for cooling components for smart terminals and base stations in the 5G era is strong. The company's timely intervention in the cooling business and expanding production will fully benefit from the growth in market space. The major customer Samsung is the world's leading smartphone and 5G base station manufacturer, and the large demand for cooling components has brought huge potential space to the company.
The company's profit forecast and investment rating: It is estimated that in 2020-2022, the company will achieve total revenue of 2,319 million yuan, 2,947 million yuan and 3,593 million yuan, with net profit of 141 million yuan, 248 million yuan and 325 million yuan respectively. EPS will be 0.69 yuan, 0.93 yuan and 1.22 yuan respectively, and PE will be 30.86 times, 22.91 times and 17.49 times respectively. Comparable companies unanimously expected 25.95 times PE in 2021. Based on the high growth of the company's core customers Samsung, OPPO, etc. next year, we gave the company 30 times PE in 2021, corresponding to the target price of 27.9 yuan, maintaining the “Highly Recommended” rating.
Risk warning: As a result of another outbreak of the epidemic, global economic recovery fell short of expectations; 5G infrastructure construction progress fell short of expectations; company fund-raising production line capacity climbed less than expected, etc.
