Increase investment in Nanjing Bio and Huayang Telecom, plus RF expansion: on February 5, 2020, the company announced that it intends to acquire 49.016% equity interest in Nanjing Bio (230 million yuan) and 40% equity interest in Huayang Telecom (360 million yuan). To achieve 100% holding of Nanjing Bio and Huayang Communications.
Downstream demand continues to break out, domestic substitution potential is huge: demand burst: according to Qorvo forecast, the global market of base station RF front-end will grow from about $500 million in 2018 to $1.6 billion in 2022, achieving a growth of 220%. In addition, the demand for micro base stations (10 million stations predicted by Sadie think tank) will relay the construction of macro base stations to ensure the continuous growth of RF demand. Domestic substitution: with the gradual withdrawal of overseas manufacturers such as skyworks and TDK, there is a huge space for domestic replacement of rings.
Ferrite materials advanced high-end market, ferrite devices batch supply core manufacturers: subsidiary Nanjing Biao's high-end ferrite materials research and development has made a huge technological breakthrough, taking the lead in cutting into the high-end market. Huayang Communications, a subsidiary, has successfully cut into Ericsson, ZTE, Huawei and other industrial chains to supply the world's six largest communications equipment manufacturers in bulk.
Cut into the high-quality RF chip track and actively promote customer verification: Chengdu Flux, a subsidiary, focuses on the research and development of low noise amplifiers, RF switches and small signal amplifiers, and continues to send samples to Huawei and ZTE. It has passed the preliminary examination of Datang Mobile and ZTE Corporation.
Profit forecast and rating
As a base station RF core manufacturer, the company will deeply benefit from the wave of 5G base station construction. We expect the company to achieve net profit of 3.0,4.2 and 490 million in 20-22, with a "highly recommended" rating of 38,27,23 times PE corresponding to the current market capitalization.
Risk hint
The epidemic continues to delay downstream orders; the speed of 5G infrastructure is not as fast as expected; and the customer verification cycle is too long.