Putian Technology is the only listing platform under China Power Grid Connect, a sub-group of China Telecom. In 2000, the company was formed by the reorganization of the Civil Products Department of the Seventh Research Institute of China Electronics Technology Group. In 2017, it purchased 100% of Far East Communications, 57.74% of China Grid Huatong's shares, 100% of Huatong Tianchang's shares, 100% of Telecom Navigation, and 70% of ASEAN Navigation's shares through the issuance of additional shares. In June 2022, “Guangzhou Jesai Technology Co., Ltd.” changed its name to “CLP Science Technology Co., Ltd.”, which is the only listing platform under China Power Grid Connect.
Backed by China Power Grid Technology, its satellite Internet industry is rich in resources and is expected to fully benefit from this round of satellite Internet wave. China Telecom Network Communications Group Co., Ltd., the controlling shareholder of Putian Technology, was founded in September 2017. It consists of five communication research institutes (Seventh Research Institute, 34th Research Institute, 39th Research Institute, 50th Research Institute, 54th Research Institute) authorized and hosted by China Electronics Technology Group Co., Ltd. and their affiliated enterprises. Among them, 54 participated in the construction of China's first fully digital satellite communication test station and collaborated to establish a national satellite communication network. In April 2021, China Satellite Network Group Co., Ltd. was established (“China Star Network” for short), which is the main enterprise in the construction of satellite Internet systems in China. Zhang Dongchen, the current party committee secretary and chairman of China Star Network, was the director of the 54th Research Institute of China Electronics Technology Group Corporation and a member of the Party Committee in March 2004. We believe that Putian Technology is the only listing platform for China Power Grid Connect, and that the Group's rich resources are expected to help the company make a difference in the era of satellite Internet.
Putian Technology is mainly engaged in the three major businesses of public network communication, private network communication and smart applications, and intelligent manufacturing, and is expected to maintain steady growth. Public network communication: By the end of September 2023, China had built and opened a total of 3.189 million 5G base stations, and the number of 5G mobile phone users reached 737 million, accounting for 42.8% of the total number of mobile phone users. As the largest third-party communications design institute in China, the company is expected to fully benefit from the 5G construction wave. Private network communication and smart applications: According to Zhiyan consulting data, China's private network communication market in 2021 was 32.65 billion yuan, and the compound growth rate in 2016-2021 reached 21.40%; it is estimated that in 2023, China's private network communication market is expected to exceed 40 billion yuan. The company has rich application cases and a leading market position in the field of private network communication, and is expected to fully enjoy the industry boom. The company has rich solutions for smart applications, and is expected to continue to expand industry application fields. Intelligent manufacturing: According to Prismark data, the output value of China's PCB industry in 2019 was about US$40.6 billion. The output value of China's PCB industry is expected to reach US$51.4 billion in 2024, with a CAGR of 4.8%. Putian Technology's PCB business mainly targets the communication electronics and special industries. It is booming and is expected to maintain a high growth rate.
First coverage, giving a “buy” rating. It is estimated that the company's net profit from 2023-2025 will be 3.04/408/501 million, respectively, and the P/E corresponding to 2023-2025 is 51/38/31x. Comparable companies have an average P/E of 61x in 2024. We believe that the company's reasonable market value is 20.4 billion yuan, and the target price is 30.00 yuan, corresponding to 50X P/E in 2024. First coverage, giving a “buy” rating.
Risk warning: 5G construction falls short of expectations; satellite Internet development falls short of expectations; industry competition intensifies.