Leading T/R component company with steady growth in performance. Guobo Electronics started with RF chips and integrated 55 microsystems divisions of CLP in 2019 to become a leading domestic T/R component company. The company has established a technical system and serial product layout with compound semiconductors as the core. The products cover T/R components, RF chips & modules, and the military and civilian fields. Backed by 55 companies, the company is currently a leading domestic enterprise that can supply active phased array T/R components and serialized RF integrated circuit-related products in batches. The total shareholding ratio of the employee shareholding platform Nanjing Xinrui reached 5.73%, which is sufficient incentive. The company's performance grew steadily, and the CAGR of revenue/net profit for the past three years was 25%/30%.
Active phased array radars are gradually becoming mainstream, and the company has fully benefited as a leader in the T/R component industry. T/R components are the core components of active phased array radars and account for approximately 60% of their cost. Active phased array radar is a mainstream trend in the development of radar technology and is expected to drive a large-scale increase in demand in the T/R component industry. The company is the core supplier of military T/R components in China. Its products are widely used in ammunition and airborne fields. In addition to internal support for machine users, the company is the most sold T/R component R&D and production platform for various military groups in China. The company's technical level is leading domestically, internationally advanced, and the upstream and downstream cooperative relationships are stable, fully benefiting from strong downstream demand and full orders.
Domestic replacement space for RF chips/modules is vast, and base station RF leaders are pioneering the terminal field. Currently, European, American and Japanese manufacturers occupy the main RF front-end market, and 5G chips have a wide range of autonomous and controllable space. The company is the core supplier of base station RF devices, and the main product performance indicators are already at the leading domestic and international advanced level. In addition, the company is expanding its RF chip business for terminals, and has now received annual product framework tenders and procurement notices from customers, which is expected to contribute to new growth.
Backed by 55 institutions, the technology and resource advantages are obvious. Compound-based, military and civilian products are combined. 55 The semiconductor core device field has a complete technical system and product chain from material growth, wafer process, device design, chip circuits to package testing, and has established an independent R&D system in the field of first, second, and third-generation semiconductors. Backed by 55 companies, the company has technical and resource advantages: in terms of military T/R components, the company's self-developed GaN RF chips have been widely used in T/R components, laying a solid foundation for future development; in terms of radio frequency for civilian base stations, the company is one of the very few companies in the world with the ability to supply GaN RF modules in batches.
We predict that the company's EPS for 2023-2025 will be 1.53, 1.86, and 2.39 yuan respectively. Referring to 2024, the adjusted average PE is 51 times that of the company, corresponding to the target price of 94.86 yuan, which is the first “buy” rating.
Risk warning
Downstream demand or active phased array radar replacement progress falls short of expectations; terminal RF chip business development progress falls short of expectations; military procurement prices risk falling; accounts receivable repayment falls short of expectations