Incident: The company recently obtained 21 patents, including a miniaturized UWB positioning antenna array, a millimeter-wave dielectric resonator encapsulated antenna module and communication equipment, 5G dual-band MIMO antenna and mobile terminal equipment.
Comment:
The world's leading one-stop pan-radio frequency solution provider, multi-business layout promotes the company's continuous development. The company's main business includes antennas and modules, wireless charging and modules, EMI/EMC devices, high-precision connectors, automotive connectivity products, passive components, etc., which can be widely used in consumer electronics, Internet of Things/smart homes, commercial satellite communications, smart cars, etc. The company maintains application research on basic materials such as radio frequency materials, magnetic materials, polymer materials, ceramic materials, etc., strengthens customer coverage of products such as antennas and modules, wireless charging and modules, UWB and modules, LCP modules, high-performance precision connectors, and passive components, and actively develops new customers. In addition, the company has carried out preliminary research work on 6G-related technologies to maintain a competitive advantage in the market.
The company is expected to benefit from a recovery in the consumer electronics market. According to IDC data, global smartphone shipments fell 3.2% year over year in 2023, 2023Q4 increased 8.5% year over year, and growth in the second half of 2023 strengthened recovery expectations for 2024. According to data from the Chinese Academy of Information and Communications Technology, the number of 5G mobile phones shipped in the domestic market from January to November 2023 was 215 million units, an increase of 12.9% over the previous year. Research agency TechInsights predicts that the 5G smartphone market will resume growth in 2024, and the global 5G smartphone penetration rate will reach 72%. The increase in the penetration rate of 5G phones will bring growth in the number of antennas and the value of RF front-end modules. The company's wireless charging module has been expanded from the receiving end to the transmitter end, improving system integration capabilities. According to Counterpoint Research's estimates, 2023Q3 smartphones supporting wireless charging worldwide increased 2% year over year, accounting for 26% of all smartphones. The increase in the penetration rate of wireless charging phones created growth opportunities for the company's wireless charging products.
Antennas and high-precision connector products can be used in commercial satellite communications, and automotive interconnection products help the intelligent development of automobiles. In the field of satellite communications, the company is vigorously expanding the application of related products. The company's antenna products can be used in low-orbit satellites, mobile phone satellites and other related fields, and product solutions such as high-precision connectors can be used in ground receiving stations for commercial satellites. It has successfully supplied some foreign customers. In the future, it will also enter more large-scale manufacturers and actively expand business development in related fields. In the field of automotive connectivity products, the company mainly provides customers with in-vehicle wireless charging, in-vehicle antennas, UWB modules and other products and integrated supporting services to help the development of intelligent automobiles; it has obtained supply qualifications from domestic and foreign OEMs such as Tesla, Volkswagen, Changan, Rivian, Mercedes-Benz, etc., and Tier 1, laying the foundation for the rapid development of the connected car business in the next 2-3 years.
Profit forecast and investment suggestions: The company consolidates the dominant position of mature businesses in clients, actively creates a second growth curve, vigorously expands business opportunities in commercial satellite communications, smart cars, Internet of Things, artificial intelligence, service robots, etc., further increases revenue share, and accelerates the leap from consumer electronics to “consumer electronics+satellite communications+smart cars” in multiple business development stages. We estimate that the company's net profit for 2023-2025 will be 691 million yuan, 914 million yuan, and 1,074 million yuan, corresponding to PE of 28.20X, 21.33X, and 18.15X, giving the first coverage a “plus” rating.
Risk warning: downstream demand falls short of expectations; new business development falls short of expectations; industry competition intensifies; risk of exchange rate fluctuations.