The overall manufacturer of military communication systems has accumulated deep private enterprises. In 2000, the company was founded in Shenzhen. It is one of the few domestic private enterprises that can undertake major military information and communication system technology. The company's core business includes three segments: integrated communications, ship communications, and information security. Through long-term adherence to technological innovation based on customer needs and undertaking model development tasks commissioned by customers all year round, the three business segments have formed mature and structured product lines, including rich media command and dispatch, intelligent guidance and control, ship communication control systems, and multi-host security service platforms, which are committed to providing integrated joint communication solutions for various command agencies, communication hubs and communication nodes at all levels. At the same time, relying on military technology accumulation, the company actively expanded the civilian product market and planned products such as distributed audio and video control systems, Bangyan Cloud PC, and AI Agent. In the first quarter of 2024, the company achieved revenue of 128 million yuan, an increase of 125.86% year on year; net profit to mother was 35 million yuan, an increase of 200.02% year on year.

The military information technology industry is facing rapid development, and the civilian goods market is broad. Military communications is an industry that comprehensively uses various communication methods to carry out information transmission activities for military purposes. It is the nerve center of military command and control communication network systems. It is the basic support for military systems to maintain effective operation. The industry mainly benefits from the downstream boom and increased degree of marketization: 1) Defense informatization spending is expected to increase as the defense budget increases, driving the C4ISR market space to continue to expand. According to Markets and Markets data, in 2016, the global C4ISR market size It has surpassed US$95 billion, and the global C4ISR market will reach US$119.39 billion in 2022, with a compound annual growth rate of about 3.56% in 2017-2022, and growth is stable; 2) Information security is an important foundation that supports and protects national security, and is shouldering the strategic task of providing security products and services for the national information infrastructure. According to Ministry of Industry and Information Technology data, in 2023, the information security products and services market reached 2232 billion yuan, an increase of 12.4% over the previous year. % or more. At the same time, with the acceleration of power grid informatization, the acceleration of the implementation of cloud terminals, and the rapid development of multi-modality artificial intelligence, the consumer goods market is also expected to usher in a vast space.

Build a moat with technical reserves and high-quality customers, and actively expand new circuits for civilian products. 1) Through long-term technological innovation and in line with specific delivery project requirements, the company successfully developed fourth-generation general communication technology platforms such as by2000, bytCA-MTCA, bytCA-ATCA, and VPX. At the same time, various general and special business boards have also been developed. As of December 31, 2023, the company had 145 R&D personnel, accounting for 37.96% of the total number; 2) The company's main customers were military customers and military enterprises such as defense and military research institutes. In 2019-2023, the top five customers accounted for 67.29%, 69.25%, 80.28%, 80.80%, and 73.79% respectively; 3) The company built a 3+1+1 business segment to restructure the business structure, establish sales models for agents and channel providers, and actively expand the civilian products market.

Investment advice: We expect the company's revenue for 2024-2026 to be 4.88, 6.21, 771 million yuan, corresponding growth rates of 169.8%, 27.3%, and 24.2%; net profit to mother of 1.04, 1.36, and 174 million yuan; and corresponding EPS of 0.68, 0.90, and 1.14 yuan. In terms of valuation, with reference to comparable companies, the company was given 40xPE in 2024, corresponding to a target price of 27.2 yuan. It was covered for the first time, and a “strong” rating was given.

Risk warning: customer concentration is too high; industry competition intensifies; product application falls short of expectations.