Incidents:
Hytera released its 2023 three-quarter report. The first three quarters achieved operating income of 3,599 billion yuan, a year-on-year decrease of 3.01%, and Q3 alone reached 1,341 billion yuan, an increase of 5.39% over the previous year. Net profit for the first three quarters was 148 million yuan, down 58.19% year on year, while Q3 alone reached 70.1 million yuan, down 79.50% year on year.
Q3 alone deducted non-net profit of 60.54 million yuan, an increase of 55.36% over the previous year. It should be noted that after excluding the impact of Cypress's investment income from the sale of Cypress in Q3 of the year, the company's net profit for the first three quarters increased by 124.24% year on year; the company achieved a net profit of 124 million dollars in the first three quarters, an increase of 441.85% over the previous year.
1. The steady and rapid increase in performance and profitability in Q3 continued, and the trend of steady and rapid improvement in performance and profitability continued to achieve net profit of 70.1 million yuan in Q3 alone, a year-on-year decline of 79.50%. Mainly, the company's investment income from the sale of Cypler in the same period last year was 287 million yuan. Excluding this impact, net profit from Q3 increased by about 28.8% year on year. The non-performance of Q3 alone was 55.36% higher than the previous year. It is worth noting that the company's net interest rate for the Q2 quarter was over 10%. The company's fundamentals are turning profit step by step, reflecting the trend of continuous improvement!
2. Emergency communications benefit, opening up industry market space
Emergency communication is a very important part of emergency response. Previously, some cities in China had already used the 370MHz band for emergency narrowband wireless communication. As a domestic leader in the field of emergency communications, Hytera is expected to benefit from continued strengthening of emergency communications in the future. China's trillion-dollar treasury bond plan recently invests in emergency and other fields, which may bring new market opportunities to the construction of emergency communications.
3. Develop a new track in the commercial industry, strengthen marketing layout and sales capabilities, and promote the marketing system to continue to deepen the industry, and drive the steady expansion of global business. Domestic companies provide communication security for major events such as “Shenma” and “BMW”, enable the digital transformation of petroleum and petrochemicals, and win the bid for the largest integrated refining and chemical project under construction in China. Overseas, the company strengthens markets along the “Belt and Road” and promotes project delivery and implementation around major projects and key regions. In addition, the company launched the G32/G36 series of commercial walkie-talkies to boost the commercial industry's new circuit to cover individuals and business people.
In terms of sales, the company promotes the “Hytera Online Mall” domestically, and the digital marketing transformation continues to advance in depth, empowering through digital means to create a one-stop marketing platform. The sales and service network covers more than 120 countries and regions around the world.
4. Looking to the future, leading private networks consolidating basic business, empowering innovative business companies to continue to consolidate their leading position in domestic private networks, launch H series products, be used in various projects around the world, and form large-scale orders for the commercial industry. At the same time:
① In terms of public-exclusive integration, the “White Paper on the Integration of Public Sectors” and the “White Paper on Security” were released overseas, and industry customers around the world and more than 20 operators collaborated to build more than 300 public-private integration platforms. Actively increase market share in transportation, energy, industry and commerce industries, and continue to promote digital marketing.
② In terms of satellite communications, the company has conducted research and technical research on the current state of the low-orbit satellite communication industry chain and related modules, and participated in the development and industrialization of multi-mode terminal products, formed a multi-mode terminal technology plan, and is promoting prototype terminal development. It can provide key satellite communication components such as noise amplifiers (LNA, LNB), power amplifiers (BUC), and redundant backup controllers, as well as various satellite communication antenna terminals.
③ In terms of new energy vehicle electronics, Shenzhen Hytera Communications Co., Ltd., a wholly-owned subsidiary, the Fuzhou Economic and Technological Development Zone Management Committee and Guomin (Fujian) Investment Co., Ltd. have jointly signed the “Hynengda New Energy Vehicle Electronics Project Strategic Cooperation Framework Agreement”. The company's new energy and automotive electronics products have been widely used in the world's leading power battery manufacturers, mainstream new energy vehicles and portable energy storage manufacturers. This cooperation is expected to further promote business development. The company's NEV electronics business is mainly for some of the leading domestic NEV battery manufacturers and automakers. Among them, major automaker customers include Geely, GAC, Jinkang, Xiaopeng, etc.
Profit forecast and investment recommendations: Affected by the operations and overall macroeconomic environment in the first three quarters, we adjusted the company's 23-year profit forecast to 4.1 billion yuan (previously 450 million yuan). The company's net profit for the 24-25 year net profit is 60/750 million yuan, corresponding to the 23-25 year PE of 27/19/15 times, respectively, maintaining the “increase in holdings” rating.
Risk warning: the risk of increased competition in the industry, the risk of geopolitical risks, the risk of litigation, the risk of technology iteration, promotion of public-private integration products falling short of expectations, etc.