Incidents:
Haeger Communications released the 2023 semi-annual report. In the first half of 2023, revenue was 2,877 billion yuan, up 15.80% year on year; realized net profit was 311 million yuan, up 6.80% year on year; realized net profit after deducting non-return income was 252 million yuan, up 7.63% year on year; basic earnings per share were 0.14 yuan, up 7.69% year on year; gross margin was 33.97%, down 3.62 pct year on year. On a quarterly basis, realized revenue for the second quarter of 2023 was 1,843 billion yuan, up 19.15% year on year; realized net profit was 269 million yuan, up 12.45% year on year.
Multi-professional layout to increase strategic investment
The company currently has four core industries covering “wireless communication, Beidou navigation, aerospace, and digital intelligence ecology”. It has the advantages of wide user coverage, broad professional span, and complete product line of professional layout, and is expected to better benefit from future industrial integration and development trends. On July 25, 2023, the company's fixed issuance application was approved for registration by the China Securities Regulatory Commission. It plans to raise no more than 1,855 billion yuan to build the “Beidou+5G” integrated R&D industrialization project, unmanned information industry base project, Tianshu R&D center construction, and satellite Internet R&D project, which is expected to further strengthen its main business advantages.
Wireless communication is increasing, and Beidou Navigation welcomes the opportunity of a new generation
In the first half of 2023, the company's wireless communication business achieved revenue of 1,320 billion yuan, an increase of 37.45% over the previous year. The next generation of main shortwave and ultra-high frequency products continued to break through new market areas; next-generation satellite communication systems, satellite navigation products, 5G products, and cluster products also made breakthroughs. Beidou Navigation achieved revenue of 110 million yuan, a year-on-year decrease of 52.99%, mainly due to the timing of signing a new contract to confirm revenue. Currently, the industry is in the transition period from Beidou-2 to Beidou-3. The Beidou-3 terminal has entered the certification and batch order stage, and the company has obtained orders one after another; in addition, the company has successively won bids for Beidou-3 application projects in the energy industry, and is the first to achieve batch application in the energy industry.
Profit Forecasts, Valuations, and Ratings
Considering the acceleration of defense informatization construction, military Beidou is expected to usher in an upgrade. The company covers four major business areas and has outstanding competitive advantages. We expect the company's revenue from 2023-2025 to be 65.38/76.73/9.093 billion yuan, corresponding growth rates are 16.42%/17.36%/18.50%, respectively, and GuiMu's net profit is 839/10.52/1,327 billion yuan, corresponding growth rate 25.57%/25.32%/26.20%, and EPS is 0.36/0.46/ respectively 0.58 yuan/share, 3-year CAGR of 25.70%. The company was given 35 times the PE valuation in 2023, the target price was 12.74 yuan, and the “buy” rating was maintained.
Risk warning: Systemic risk, uncertainty over fixed distribution, increased competition in the satellite navigation market, defense informatization construction falling short of expectations, and business field expansion falling short of expectations.