Investment summary
A leading domestic pan-radio frequency company, the scope of business continues to expand. Xinwei Communications is committed to the two-way expansion of the depth and breadth of its business. Currently, it mainly manufactures products including antennas, wireless charging modules, high-speed connectors and cables. Applications cover various fields such as consumer electronics, automobiles, Internet of Things/smart homes, communications, and data centers. The company's business map has spread across 7 countries and 15 regions, and has successfully completed the construction of various divisions around the world.
Focus on major customer strategies and share long-term growth value with customers. Xinwei Communications is the only supplier in the world that simultaneously covers the top three mobile phone brands in the field of wireless charging. Sharing value with leaders creates the core competitiveness of the company. Along with the continuous development of automotive application scenarios, Xinwei continues to invest in in-vehicle wireless charging modules, successfully obtained Tier 1 supply qualifications from OEMs such as Mercedes-Benz, Volkswagen, and Guangzhou Automobile Honda, and continues to accelerate customer expansion for NEV companies.
The new revolution in the 5G catalytic antenna industry has boosted a new logic of development by rising volume and price. 1) In the context of the continuous evolution of 5G technology and the variety of IoT terminals, the company's antenna sales achieved further breakthroughs along with the industry's upgrading and replacement needs; 2) Xinwei successfully entered the LCP antenna field, continuously strengthened its one-stop capabilities from materials to modules, served many major North American customers, and achieved major breakthroughs in millimeter wave technology, and the antenna value gradually increased.
Satellite communications lead enterprises to develop new businesses, and a second growth curve begins. Low-orbit satellite bands and orbital resources are limited, and competition among countries is becoming increasingly heated. Along with the two-way expansion of ground equipment construction and satellite manufacturing, the number of Starlink users continues to increase. Xinwei is expected to use strong overseas layout capabilities and good relationships with North American customers to share the high growth space of the new circuit and create long-term increases in corporate revenue.
Investment advice
As an industry leader in high-frequency high-speed connectors and antenna equipment, the company is expected to benefit from the long-term expansion of the satellite communication market. As the construction of satellite constellations and ground facilities simultaneously enters a period of accelerated development, we expect the company to achieve net profit of 695 million yuan, 898 million yuan, and 1,184 million yuan in 23-25, with growth rates of 7.27%, 29.18%, and 31.81% respectively. The closing price on March 11, 2024 corresponds to the 2023-2025 PE forecast to be 29.76, 23.04, and 17.48, respectively. It was covered for the first time, giving it a “buy” rating.
Risk warning
The risk of insufficient commercialization of satellite communications; increased risk of competition in the satellite communications market; the expected risk of insufficient upgrading of traditional business products.