Gongjin 无锡桑拿网 shares (603118): its appearance is not good but it benefits from industry growth
Matters: Recently, the 5G sector has ushered in a general rally, and many investors are very concerned about Gongjin shares.
We believe that although the company’s weapons sector is not very high in technical barriers, it will indeed benefit from the growth of the industry. In addition, the price of raw materials such as upstream chips, capacitors, and resistors will be reduced. The gross profit margin will increase significantly, and it is expected to usher in an inflection point.The leading internal broadband communication terminal manufacturer will fully share the “Broadband China” strategy and the bonus of Gigabit optical network upgrade in the future. It is recommended to focus on it.
Comment: The all-round king of broadband communication terminals, a leading domestic broadband communication terminal industry ODM manufacturer company has started the development, production and sales of broadband communication terminals since 2005. The company’s current products include optical receiving terminal equipment, DSL receiving terminal equipment, wireless and mobileThere are four types of receiving terminal equipment, PLC and EOC receiving terminal equipment. Among them, optical receiving terminals include two types: EPON and GPON, DSL receiving terminals include three types: ADSL, VDSL, and VDSL2. Wireless mobile receiving terminal devices include WIFI, AP, 3G, and LTE.Class terminal.
The company has established many years of partnership with operators and system equipment providers with global market influence, such as BT, ZTE, Shanghai Bell, Fiberhome, D-Link, Sagem, Great Wall Broadband, etc.Become a leading ODM manufacturer in the domestic broadband communication terminal industry.
Large communication equipment providers require ODM suppliers to provide high-level technical research and development capabilities and scale expansion and rapid delivery capabilities. Therefore, communication equipment providers generally do not change upstream suppliers, benefiting from years of cooperation with large communication equipment suppliers., The company already has strong technical research and development capabilities and scale advantages, in the future is expected to be able to use brand and channel advantages to obtain more orders.
At present, the company’s products cover all types except the satellite broadband receiving terminal, which has become the king of the broadband communication terminal industry.
The cost of raw materials is estimated to return to normal levels, and the turning point in performance may come in 2017. As a result of exchange losses (more than 50 million yuan in exchange losses due to the decline in the exchange rate of the US dollar against the RMB), the cost of raw materials has risen (materials such as storage and capacitors have increased by about 1 ‰), and customers have reduced their prices.Increasing labor costs (a gradual increase of approximately 38 million yuan), the company’s expansion in areas such as mobile communications, and other factors affected the company’s net profit growth to decline, achieving net profit attributable to shareholders of listed companies.
10,000 yuan, a year-on-year decrease of 70.
In 2018, the company actively adjusted its strategic structure, developed direct operator business in the main communications terminal business field, and sold products directly to operators, successfully winning the bid of China Mobile Hangzhou Research Center and China Mobile Internet of Things; at the same time strengthening new product developmentCapabilities, develop high-end products, expand high-end customers, increase product gross margins, vigorously lay out innovation areas, and have achieved initial results in the field of outreach M & A.
According to preliminary calculations by the financial department, it is estimated that the proportion of net profit attributable to shareholders of listed companies in 2018 will increase by approximately 89.63 million yuan, at least approximately 88, compared with the same period of last year (101.37 million yuan).
In terms of cost, the company’s main raw materials include chips, PCBs, power supplies, optical modules, and electronic components, which are basically general electronic components.
Raw materials account for more than 86% of production costs.In 2018, the electronics industry component field generally ushered in price increases. Among the passive components, MLCC rose the largest, and aluminum electrolytic capacitors and chip resistors also showed price increases. The prices of copper-clad boards and PCBsIt also performed well during this period. From the end of 2018 to the present, the price of such electronic components has declined, which has helped improve the company’s gross profit level.
The domestic fixed-line broadband construction continued to expand and the industry was highly prosperous. On August 10, 2018, the Ministry of Industry and Information Technology and the Development and Reform Commission jointly issued the “Three-year Action Plan to Expand and Upgrade Information Consumption (2018-2020).
By 2020, the scale of information consumption will reach 6 trillion, with an average annual growth rate of more than 11%, and the leading role of information technology in the consumption field will be significantly enhanced, driving the related fields to reach the goal of 15 trillion.
With the advancement of “Broadband China” and “Three Networks Convergence” strategies, the demand for emerging services such as cloud computing, big data, and the Internet of Things has driven the demand for high-speed broadband from users.
The “Three-year Action Plan” requires: to further expand the “Broadband China” strategy, organize the implementation of a new generation of information infrastructure construction projects, promote the deep coverage of optical fiber broadband and fourth-generation mobile communications (4G) networks, and accelerate the fifth-generation mobile communications (5G)) Standard research, technical trials, and promotion of 5G-scale networking construction and application demonstration projects.
Deepen the pilot of universal telecommunications services and improve information access capabilities in rural areas.
Increase network fee reductions and fully release network speed increase and fee reduction bonuses.
Pilot demonstrations in industrial, agricultural, transportation, energy, municipal, environmental protection and other fields.
By 2020, achieve optical network coverage in urban areas and provide 1000Mbps access service capabilities; 98% of administrative villages will achieve fiber access and 4G network coverage, and provide 100Mbps access service capabilities in conditional regions; ensure the launch of 5G commercial services.
Acquired Shandong Wenyuan and actively deployed 5G companies to acquire 100% equity of Shandong Wenyuan Communications for a total of 70 million yuan in cash.
Through this acquisition, the company’s development in the field of 4 / 5G mobile products and network systems will be accelerated.
Shandong Wenyuan is committed to the research and development and production of 4G and communication systems. It has specialized skills to provide end-to-end customized solutions for private network customers, and has mastered a full set of core technologies for 4G base stations. It is a leader in the micro-broadband private network market.4G.
Shandong Wenyuan’s LTE wireless broadband mobile communication series products have carrier grade 4G product expansion, high performance, high stability factors, and can be customized for customers to develop solutions that meet proprietary requirements.
Its TDD / FDD-LTE wireless broadband mobile communication products are widely used in emergency communications, video surveillance, voice and video calling, voice and video scheduling, wireless multimedia scheduling and other fields. The private network users served include public security, military, power, and wisdomAgriculture, transportation, forestry and other fields.
Optimistic about the company’s brand and channel resources, covering for the first time, giving a “buy” rating and accompanying the rapid growth of the global number of fiber access users and the steady advancement of the “broadband China” strategy, the company’s optical access equipment market has strong demand; huge XDSL usersThe base number will bring stable demand for XDSL terminal equipment to the company; in smart cities, 4G will explode the market demand for wireless and mobile receiving terminals. In the future, the company’s wireless and mobile receiving terminals will bring thicker performance to the company.
Optimistic about the company’s brand and channel advantages in the field of broadband communication terminals and its layout in the 5G field, it is estimated that the company’s operating income for 2018-2020 will be 86/100/115 ppm and the net profit attributable to the parent company will be 1.
97 ppm, the current expected PE is 35/23/17 times, the first coverage, giving the company a “Buy” rating.
Risks indicate that the order landing time is longer than expected; raw material prices fluctuate.