Main points of investment
Event: the company issued an announcement and received the "bid winning notice" of China Mobile Limited's centralized procurement project for combined switching power supplies from 2020 to 2021. The winning share of the company was 40%, and the bid quotation was 362 million yuan (excluding tax).
The share of winning the bid is as high as 40%, which greatly exceeds the market expectation. Historically, the company's bid-winning share among the three major operators is 10%, 20%, with the "China Mobile Limited 2019-2020 Integrated Power Collection Project" in January this year.
For example, the winning share of the company in the three packages is 19.57%, 14.49% and 17.39%, respectively. According to China Mobile Limited procurement and bidding network, the collection scale of the combined switching power supply is about 37500 sets, and the procurement content is 48V combined switching power supply. The company's bid-winning share is as high as 40%. The remaining three winning candidates are ZTE, Weidi Technology, and Mingpu Optical Magnetics, with a share of 30%, 20% and 10%, respectively, and the bid price is 3.31amp 3.98 / 380 million yuan respectively. The share of the bidding company ranks first, greatly exceeding market expectations.
5G base station power advantage verification, Q1 order has exceeded 2019 for the whole year. As an important part of the new infrastructure, the number of 5G base stations is expected to exceed 700000 in 2020, giving rise to a broad supporting power demand; the company's bid-winning share ranks first, highlighting its dominant position in the field of 5G base station power supply, laying the foundation for winning the bid for the whole year. According to the interactive easy platform, the company's communication power order in the first quarter of 2020 has exceeded that of 2019, and the order in 2020 is expected to continue to exceed expectations, thus supporting a high performance increase in 2020.
The delay in the pace of delivery led to fluctuations in performance, with full orders supporting Q2 and high growth throughout the year. The projected loss in the first quarter of 2020 is mainly due to: 1) the epidemic has led to delays in the resumption of work by upstream and downstream enterprises, restrictions on freight delivery, and delays in the delivery of the company's products; 2) the new infrastructure has brought about the outbreak of demand for 5G base station power supply and IDC power supply system, changes in the company's order structure and adjustment of the delivery cycle. According to the interactive easy platform, as of March 24, the company's new orders for communication power supply have exceeded the whole of last year, and the new orders for the data center power supply system have reached half of those for the whole of last year. The company's newly signed and existing orders are full, and the performance will enter the fast lane of growth from the second quarter.
Binding leading customers such as BAT, benefiting from the outbreak of demand for IDC power supply system. Under the influence of "new infrastructure" and epidemic factors, the demand for power supply system in data center has broken out. The company is the leader of domestic HVDC and establishes deep cooperation with BAT, Dataport and other core customers. In 2019, the company jointly with BABA launched a new generation of data center power supply system (Panama system, which has the characteristics of integration, high efficiency and high reliability, etc.), which has significant advantages in terms of investment cost and installation space. It is expected to further increase the company's share and will fully benefit from the outbreak of industry demand.
Investment suggestion: the company is the leader of 5G base station power supply and IDC power supply system. This high-share bid confirms the company's dominant position in the field of 5G base station power supply, and will fully benefit from the outbreak of demand for 5G base stations, IDC, charging piles and other links in the "new infrastructure". The delay in the pace of delivery in the first quarter briefly fluctuated the results, and the newly signed orders were much higher than expected to support the high performance in the second quarter and the whole year. We estimate that the company's 2019-2021 net return profit will reach 0.78max 186max 263m, EPS 0.14max 0.33max 0.47, corresponding to the closing price PE of March 30, 2020 is 94.0max 39.3pm 27.7 times, maintaining the overweight rating.
Risk hints: 5G base station construction is not as expected, IDC construction is not as expected, and power grid investment is not as expected.