NARI Radar: Phased Array Radar “Little Giant”, Providing Full Value Chain Solutions
Narei Radar is a leading supplier of fully polarized active phased array radar system solutions in China. Its main products are X-band bipolar (dual polarization) active phased array radar and supporting software and hardware products. It is mainly used in the field of meteorological detection, and is marketed in fields such as water conservancy and flood control, civil aviation, ocean monitoring, and public safety monitoring. The company has long focused on the field of phased array radar and has become a “full value chain” radar system solution provider integrating phased array radar design and manufacturing, radar software ecosystem, and radar algorithm services. At the same time, as the founder of the first ultra-high spatial and temporal resolution X-band bipolar active phased array radar weather observation network in China, the company's phased array radar system product research and application were certified as “international advanced level” by the China Radar Industry Association. X-band bipolar active phased array radar ranked first in the cumulative number of bids for similar products in China in 2018-2021, and was recognized by the Ministry of Industry and Information Technology as a national-level specialized new “little giant” enterprise in 2022. In 2023Q1-3, the company achieved revenue of 113 million yuan, +19.33% year-on-year, and net profit of 33 million yuan, -7.81% year-on-year.
Phased array radar is gradually becoming the mainstream system, and the civilian market space is expanding at various points
Technical side: Phased array radar has advantages such as rapid beam transformation, is accelerating the application replacement of mechanical radar, and is showing development characteristics such as active replacement of passive, X band complementary S/C band, and single polarization to double polarization upgrade. Furthermore, collaborative networking observation trends are expected to significantly expand the number of applications of X-band dual-polarized active phased array radar in meteorology and other fields.
Demand side: At this stage, phased array radar is mainly used in the military field. Domestic phased array technology development and T/R component cost reduction are accelerating the development of the civilian market. Increased demand for blind compensation from downstream meteorological departments, the transition of water conservancy monitoring from fixed points on the ground to “sky” collection, and the promotion of domestic replacement of civil aviation management radar are driving the expansion of the civil market space for phased array radar in many ways. We estimate that the demand for X-band phased array radars in the domestic meteorological field alone has reached 1,045 units, and the hardware market space exceeds 7.8 billion yuan.
Company competitive advantages: outstanding advantages in pioneering and cost reduction, diversified expansion of meteorology+water conservation+civil aviation+vehicle
1) Technical advantages: Based on core technologies such as microstrip patch array antennas, the company's self-developed X-band bipolar phased array radar has high spatial and temporal resolution characteristics, and related technical indicators are superior to comparable products; 2) Cost advantage: COTS model+core module self-development+material localization, the company's low-cost industrialization advantages are highlighted, and profitability is significantly higher than that of comparable companies; 3) First-mover advantage: pioneering the industrialization of phased array radar in the meteorological field, and actively expanding new application fields such as water conservancy, civil aviation management, and maritime affairs, and in 2023 In January, the world first C-band microstrip patch was launched Antenna bipolar phased array weather radar establishes a first-mover advantage in product development and market development; 4) New growth points: Forward-looking development of a 77GHz vehicle-mounted millimeter wave radar has entered the boom track for intelligent driving, which is expected to form a new performance growth point.
Investment suggestions: We expect the company's revenue for 2023-2025 to be 300/ 6.35/ 1,149 billion yuan, net profit of 1.32/ 3.04/ 571 billion yuan, net profit of 1.32/ 3.04/571 million yuan, and the corresponding PE of the current stock price is 60.7/26.4/14.1x.
Optimistic about the company's low-cost industrialization capability and first-mover advantage in the civilian phased array radar market, etc., it was given 40 times PE in 2024, corresponding to the target price of 78.6 yuan, covering the first time, and giving it a “buy” rating.
Risk warning: risk of fluctuations in raw material prices, risk of increased industry competition, risk of technology research and development, business risk, receivables risk, risk of changes in government subsidies.