Tongyu Communication (002792): 5G antenna leader is about to enter the fast track of growth

Tongyu Communication (002792): 5G antenna leader is about to enter the fast track of growth
Core point of view 5G highly flexible varieties, greet huge growth potential.Tongyu Communication is a manufacturer of base station antennas, radio frequency devices and microwave antennas in mobile communication systems. It is a leader in the field of base station antenna segmentation.The company’s industry is affected by the influence of the operator’s capital expansion, and the company’s operating performance has been dragged down in the past few years.When the new round of network construction potential comes, the performance of companies in the industry can often reflect high flexibility.Facing the potential of 5G, according to estimates, the company’s profit is expected to maintain a compound growth rate of more than 95% in the next three years. The advantage of scale research and development is an important competitive element of the company.In the early stages of technological progress, the maturity of the various transformations of the industrial chain was not high. In order to ensure the quality of their own product delivery, equipment manufacturers usually choose to cooperate with companies with relatively strong technical strength to jointly promote the development of new products.Therefore, companies with technological advantages can be the first to enter the cooperative supply chain of equipment manufacturers.In this process, the antenna company on the right has a large-scale R & D advantage.Tongyu and several other leading companies ranked R & D in a leading position.We believe that the company’s scale research and development advantage will help the company to obtain a higher market share with the equipment supplier, so that the company can take advantage of technology to enjoy early high profit margin dividends. Excellent cost control capabilities are conducive to maintaining market share.In the period of mature technology and large-scale product scale, the company’s excellent cost control ability is an important factor for the company to maintain market share in equipment manufacturers.The company has improved production and management efficiency by increasing automation costs in all aspects of production, optimizing the production process, and adopting the amoeba business model.As the technology matures, the company is still expected to maintain a high level of competitiveness in the competition. Financial Forecast and Investment Recommendations We predict that the company’s net profit attributable to its mother in the years 19-21 will be 1.19/2.70/4.33 trillion, the corresponding gain is 0.35/0.80/1.29 yuan.Given that the company’s 5G products will start to scale in 2020 and contribute major revenue,武汉夜生活网 referring to the adjusted P / E ratio of 33 times for the comparable company in 2020, given the company’s forecasted annual net profit growth rate will be higher earlier, it will be given a 15% evaluation premium and 38 times the P / E ratio.The corresponding target price is 30.40 yuan, the first coverage given to “overweight” rating. Risk warnings: 5G construction progress and company-equipment cooperation fall short of expectations, profitability declines rapidly, and sudden systemic risks in the sector