Incidents:
Jiulian Technology issued a voluntary disclosure notice on the winning bid results. The company pre-won the bid for the “China Mobile 2024-2025 Smart Home Gateway Product Centralized Procurement (Open Procurement Section)” project on February 28, 2024. A total of 11.68 million smart home gateway devices were selected. The total bid amount is estimated to be 1.15 billion yuan (tax included), with an average unit price of 98.3 yuan/unit.
Comment:
Focusing on the operator market, the company's main products are highly competitive. The pre-selected packages include smart home gateways gPON-dual-band WiFi6, 10G GPON-WiFi6, GPON - no WiFi, and 10G GPON - no WiFi. The winning share of each package was around 15%, demonstrating the company's product competitiveness. Smart home gateways are one of the company's main products. The company's product line covers various product categories such as smart network set-top boxes, DVB digital set-top boxes, ONU smart home gateways, integrated smart home gateways, smart routers, NB-IoT modules, LTE communication modules, 25G front-transmission optical modules, smart cameras, law enforcement recorders and evidence management platforms, and has the ability to develop customized products according to operator needs.
The popularity of the “gigabit network” expands the smart home gateway market space, and the company continues to lead the way in technology.
In the current context of the rapid development of basic broadband networks in China and the continuous increase in the popularity rate of “gigabit networks”, smart home gateways are in the beginning stages of upgrading and iterating from GPON smart home gateways to 10GPON smart home gateways with high transmission rates, and smart routers are also being upgraded from the WIFI5 standard to the WIFI6 standard. The company has rich technical reserves in the 10GPON and WIFI6 business fields, and the core products have certain advantages in terms of access rate, throughput and cost.
Based on “Hongmeng”, we continue to improve product performance. As one of the first open source Hongmeng ecological strategic partners, the company is intensively developing AI computing power development boards, gateways, OTT, screen projectors, smart boxes, smart doorbells, smart door locks, and smart speakers based on the Hongmeng system. The company is expected to continue to empower its products through software and continue to expand its leading edge in product performance.
Profit forecast and investment rating: We expect the company's revenue for 2023-2025 to be 24.70 billion yuan, 29.50 billion yuan, and 4.20 billion yuan, respectively, and net profit to mother of -0.12, 1.33, and 267 million yuan, respectively. Maintain an “Overweight” rating.
Risk warning: Competition in the industry intensifies, and profit forecasts and valuations fall short of expectations