Military PCB production expansion is expected to increase performance, increase the layout of civilian new business to create new growth points, high-tech barriers and long verification cycle are the characteristics of the military PCB industry. Military industry information construction is expected to accelerate in the post-military reform period, promoting the industry boom. Jesse Technology as a domestic military PCB leader, PCB production expansion is expected to drive income and net profit improvement. Civil products business, the company plans to cut into 5G small base stations, 5G high-end crystal oscillator and other new markets to create new performance growth points. We estimate that the company's net return profit from 2020 to 2022 will be 0.9 million 170,000,000 yuan respectively, giving the company the 2021 60.33x target PE, corresponding to the 2021 target price of 18.12 yuan, with the first overweight rating.
There is still room for improvement in the asset securitization rate of military industrial groups, and high-quality development helps improve the management efficiency of companies. According to a speech made by Yan Qingmin, vice chairman of the Securities Regulatory Commission, at the forum of listed companies of national defense industry held in March 2019, the asset securitization rate of military industrial groups in China is still low compared with large foreign military enterprises (according to our estimation, the average asset securitization rate of major military industrial groups in China in 2019 is 45%. Among them, 31% of the Electric Group), China's military enterprises have great potential and space to make use of the capital market. China Netcom, the controlling shareholder of the company, is the communication network information industry platform of the Electric Technology Group, which has jurisdiction over 54, 7 and other high-quality assets. in addition, in mid-July 2020, Netcom stressed in its mid-year work report that it will deepen high-quality development. We believe that the company, as the only listed company platform of China Grid Communications, is expected to usher in a continuous improvement in profitability under the promotion of the high-quality development goal of China Power Grid Communication in the future.
National defense information construction is expected to speed up, military PCB business to expand production to share the economic dividend of the industry, according to Prismark forecast, the global military PCB market compound growth rate of 4% from 2019 to 2023.
We believe that military information construction is expected to accelerate during the 14th five-year Plan period, driving the compound growth rate of the domestic military PCB market in the same period is expected to reach 10%. The total scale of 2023 is expected to reach 14.4 billion yuan. Military PCB is required to work stably in complex environment (high temperature, complex electromagnetic environment), so it has high technical barriers and verification barriers. Jesse Technology is the domestic military PCB leader, benefiting from the improvement of the industry, the company's military PCB orders increased by more than 30% in the first half of 20 years compared with the same period last year. On this basis, the company actively promotes the release of production capacity and is expected to share the growth dividend of the industry.
To expand the business of 5G small base station and 5G high-end crystal oscillator, it is expected to create a new kinetic energy company to issue a fixed increase plan to invest in 5G small base station, 5G high-end crystal oscillator and other projects. In the field of communication, crystal oscillator is the core electronic component of the base station, which can provide reference clock signal and receive transmission signal. According to our estimation, the domestic demand for 5G crystal oscillator is expected to reach 2.6 billion yuan in 2021. At present, the domestic supply is mainly dependent on imports. Affected by the overseas epidemic in 2020, the supply shrank, the prices of some crystal oscillator products increased and the supply period was extended, further stimulating domestic demand. We believe that the development of the fixed increase project is expected to help the company seize 5G and import substitution opportunities. In terms of 5G small base stations, we estimate that the domestic market is expected to reach 3.6 billion yuan in 2021, and the company is expected to cut into the 5G small base station market to create new growth points.
For the first time, it covers the rating of "overweight".
We estimate that the return net profit of the company from 2020 to 2022 will be 0.99170 million yuan respectively. Comparable to the company's 2021 Wind consensus forecast PE average value is 60.33x, giving the company 2021 60.33x target PE, corresponding to the 2021 target price of 18.12 yuan, the first time to cover the "overweight" rating.
Risk tips: military PCB business expansion is not as expected; 5G small base station and high-end crystal oscillator research and development is not as expected; accounts receivable impairment risk; the company's traditional business development is not as expected.