The multi-business layout of “consumer electronics+satellite communication+smart car” helps the company develop: the company's main business includes antennas and modules, wireless charging and modules, EMI\ EMC devices, high-precision connectors, automotive interconnection products, passive components, etc., which can be widely used in consumer electronics, Internet of Things/smart homes, commercial satellite communications, smart cars and other fields. The company's business continues to expand, and has achieved a leap from consumer electronics to “consumer electronics+satellite communication+smart car” multi-business development stage.
In 2022, the company achieved revenue of 8.59 billion yuan (+13.3% year-on-year) and net profit of 650 million yuan (+28.4% year-on-year).
The company is a leading connector supplier and has a first-mover advantage in the satellite receiver market: the number of base stations in the US is small, and millimeter wave coverage is poor. As a result, the base stations installed by operators can only meet the communication needs of densely populated cities, leaving enough room for development for satellite communications. Satellite communication has achieved global signal coverage by arranging a large number of satellites in low-Earth orbit. Users only need to simply install and supply power to terrestrial receivers to experience the 100 megabit Internet in regions not covered by base stations.
Since Starlink was commercialized, the number of users has grown rapidly, and has now exceeded 2 million. Xinwei Communications is a leading supplier of terrestrial receiver connectors and has a first-mover advantage. As an established manufacturer of RF antennas, Xinwei Communications has accumulated rich experience and talent support in antenna development and design. It is expected to break through the technical barriers of terrestrial receiver antennas and further enjoy the dividends of satellite user growth.
The penetration of 5G has helped the antenna business grow, and the wireless charging space is vast: mobile phone sales growth has stagnated in recent years, and smartphones have entered the stock stage. However, with the development of communication formats, benefiting from the continuous increase in the penetration rate of 5G mobile phones, the increase in the number of antennas required in 5G mobile phones, and the increase in antenna value, it has still created growth opportunities for the company's antenna business. At the same time, since wireless charging has the advantages of strong compatibility and rich expandable scenarios, the penetration rate of wireless charging mobile phones is also constantly increasing. The company has been deeply involved in magnetic charging technology for many years, has built vertical integration capabilities from wireless charging materials to modules, and has also accumulated extensive supply experience to domestic and foreign technology manufacturers, especially in magnetic materials such as ferrite and nanocrystals, which can provide different solutions. The company's wireless charging products can be used in fields such as consumer electronics and automobiles. The market space is broad, or it may create new growth opportunities for the company.
Profit forecast and investment rating: We predict that the company's earnings per share for 23-25 will be 0.73/0.98/1.29 yuan respectively. The company is a leading manufacturer of consumer electronics RF and structural components, so we selected Lixun Precision, Linyi Intelligent Manufacturing, Shunluo Electronics, and RF leader Zhuo Shengwei as comparable companies. The company's valuation was lower than the 23 year average PE valuation of comparable companies, covering the first time, giving it a “buy” rating.
Risk warning: Product iteration risk, market share decline, and business development falling short of expectations.