Bangyan Technology is a high-quality supplier of military communication system-level products. The company provides information and communication system-level products for command posts, communication hubs and communication nodes at all levels, undertakes the task of developing multi-type warship products and subsystems one after another, and realizes the product layout from a single model to a subsystem. It is a high-quality supplier of military communication system products. At present, the company's revenue is mainly military products, accounting for more than 95%, and actively expand the market for civilian products, including the government and power and other special network areas, the proportion of civilian products is expected to gradually increase in the future.

The right to control information has become the core consideration to seize the control of the battlefield in the new era, and the communication business is waiting for the Nuggets. With the evolution of the new war form, the right to control information has gradually become the core consideration to seize the comprehensive control of the battlefield, and the demand for domestic equipment informatization has increased greatly. In view of the informationization development process of the US military, it is estimated that the procurement budget of China's C4I communication system equipment will be about 63.25 billion to 94.88 billion in 2022, and will reach 80.15 billion to 120.23 billion yuan in 2025, with a compound growth rate of about 8.2% in three years. The company has multi-tentacle layout and integrated communications, and has undertaken a number of large system and subsystem technology as well as the overall task of construction, with 13 stereotyped products. Under the background of the current national efforts to promote integrated joint operations, integrated communication will become one of the important directions of military information construction. The company's forward-looking layout, the first-mover advantage is obvious, the future will significantly benefit from the improvement of military information, business development is expected to enter the fast lane.

Benefiting from the continuous growth of the warship industry, the basic plate of warship communications business is expected to be further consolidated.

According to the structure of military expenditure, the annual market size of the warship industry is expected to be about 700 to 140 billion yuan, and the annual market size of the warship supporting industry is about 438 to 87.7 billion yuan. According to incomplete statistics, China is expected to add about 20 medium and large warships and about 80 other small warships in the coming year. The competition in the domestic warship communication market is benign and the industry concentration is high. The company has 14 stereotyped products, the core competitiveness is prominent. In the middle and later period of the 14th five-year Plan, the military ship industry will maintain a small and rapid growth. The company has been ploughing for many years and has a prominent position in the industry. with the continuous growth of the industry, the basic plate of warship communications business is expected to be further consolidated.

Military network security market demand is strong, the company is expected to create a second growth pole. According to IDC data, China's cyber security IT expenditure will reach US $31.86 billion in 2026, with a five-year compound growth rate of 21.2%. There are broad market prospects, of which the military network security market accounts for about 3%. With the improvement of the organizational structure of the army, various types of security equipment and security data are increasing rapidly, and the demand for network security is increasing rapidly. We expect the growth rate of the military network security market to be better than the industry average, with a compound growth rate of 25% and 30% during the 14th five-year Plan period. The company has been involved in this field for a long time and has a deep accumulation of technology. it has finalized 9 model products and undertaken 13 model development tasks. it is a major product research undertaker and product provider in this field. and is expected to build the military network security business into the company's second growth pole.

Industry valuation judgment and rating description. It is estimated that the return net profit of the company from 2022 to 2024 is 61 million, 110 million and 231 million respectively, the EPS is 0.40,0.72 and 1.52 yuan respectively, and the corresponding PE is 60X, 34x and 16x. As one of the core suppliers in the field of domestic military communications, the company has been ploughing the industry for many years and has obvious first-mover advantages. taking advantage of the east wind of informationization and security, the company can develop rapidly in the future. Cover for the first time and give a "recommended" rating.

Risk hint: downstream demand is lower than expected; the risk that R & D progress is not as expected.