1H performance is expected to continue, and I am optimistic about the company's development in the long term
1H22's revenue/net profit attributable to the mother/net profit of the non-return to the mother was 1.83/0.23/18 million respectively, up 6.88%/7.23%/42.45%. Among them, 2Q22 revenue/net profit of the return to the mother/net profit of the non-return mother was 166/0.43/4041 million respectively, up 53.7%/207.14%/355.56%. Considering that the company is leading the military sector, and demand for military 5G and broadband autonomous networks is expected to rise in the future, we keep our profit forecast unchanged. We expect net profit from 2022 to 2024 to be 348/426/513 million, respectively.
According to Wind's consistent expectations, the average PE value of comparable companies in 2022 is 32x. In the context of the rapid development of defense informatization, we believe that the military communications industry will maintain a high level of prosperity, giving the company PE32x in 2022, with a target price of 17.75 yuan/share (previous value of 19.52 yuan/share), maintaining the “buy” rating.
The penetration of regional broadband will accelerate in the short term. Long-term military 5G and autonomous networks will open up a new growth curve. As new equipment such as drones/cars/ships, remote sensing equipment, and portable radars continues to be put into use, there are more and more broadband services such as video, images, and raw radar information. Among various broadband technologies, regional broadband was the first to mature with its advantages such as high speed, high compatibility, and low latency, and is just what is needed at the current time. As a leader in the field of military area broadening, Hxun is striving to achieve full military coverage of regional broadening products. We believe that the company has broad profit margins. In the future, military 5G combined with self-organized networks can achieve close access to communication and obtain greater battlefield advantages. It is expected that future demand will continue to increase. Haxon is deploying the military 5G market ahead of schedule and striving to form a “chip-module-terminal-base station-system” industry chain layout in the 5G era, which is expected to turn military 5G into the second growth point after the expansion of military zones.
Fundraising projects are progressing steadily, and commercialization of 5G small base stations is imminent
With the gradual implementation of the 5G layout, the “double gigabit” network represented by 5G and gigabit optical networks has become an important component and carrier base for the current new infrastructure. In March 2020, the Ministry of Industry and Information Technology issued the “Notice of the Ministry of Industry and Information Technology on Promoting the Accelerated Development of 5G”, which clearly states that it is necessary to speed up the construction of new infrastructure such as 5G network deployment. In the 5G field, in the past, China mainly deployed acer stations. The competitive pattern in the small base station market is still unclear, and most products are still in the R&D improvement stage. In May '21, Hanxun raised 1 billion dollars for R&D base projects to deploy small 5G base stations early. As of 1H22, Haxun has obtained the Internet access license and model approval certificate from the Ministry of Industry and Information Technology, and the 5G small base station project has completed the development of a basic prototype of the first-generation integrated station. It is expected that commercialization will be achieved in the second half of the year, providing impetus for revenue and profit growth.
Maintain a “buy” rating
Considering that the company's penetration rate in the field of wide military zones has broad room for growth, and demand for military 5G and self-networking services is expected to rise in the future, we maintain the company's net profit forecast of 348/426/513 million for 2022 to 2024, respectively. According to Wind's consistent expectations, the average PE value of comparable companies in 2022 is 32x. In the context of the rapid development of defense informatization, we believe that the military communications industry will maintain a high level of prosperity, giving the company a 2022 PE32x with a target price of 17.75 yuan/share (previous value of 19.52 yuan/share), maintaining the “buy” rating.
Risk warning: The pandemic affects product delivery; R&D progress falls short of expectations; downstream demand falls short of expectations.
