2021-10-27 Luo Lu of Guojin Securities Co., Ltd. studied Mobile Communications and issued a research report entitled "increase income and profit, firmly optimistic about the high growth prospects of the module leader". This report gives a buy rating for Mobile Communications, and the current stock price is 174.96 yuan.

Remote Communication (603236)
Brief comment on performance
On October 26, 2021, the company released its three-quarter report of 2021, with revenue of 7.476 billion yuan during the reporting period, an increase of 77.66% over the same period last year, and a net profit of 237 million yuan, an increase of 89.53% over the same period last year, deducting 225 million yuan of non-return net profit, an increase of 127.92% over the same period last year. Revenue in the third quarter alone reached 3.161 billion yuan, an increase of 84.73% over the same period last year, and the performance slightly exceeded expectations.
Business analysis
Gross profit margin rose month-on-month, high profits continued to cash in. In the third quarter alone, the company's gross profit margin of 19.05%, 1.98PP growth, upstream raw material price fluctuations and other problems caused by the downward impact of gross profit margin alleviated, gross profit margin is expected to continue to rise in the fourth quarter. During the reporting period, the company's three rates continued to be optimized, and the sales / management / R & D expense rates in the first three quarters were 2.97%, 2.36% and 9.87%, respectively, with a drop in 0.82PP/0.50PP/0.52PP. At the same time, the company actively prepared goods, with inventory of 3.065 billion yuan in the first three quarters, an increase of 134.14% over the same period last year and 6.6% month on month. During the reporting period, the company continued to maintain a net profit growth rate higher than revenue growth trend, since 18 years of income without profit scissors difference completely disappeared, high profits continue to cash in.
The product structure continues to be optimized and adjusted, and the production capacity expansion shows the leading confidence. With the rapid development of the Internet of things, the demand scenarios of downstream intelligent terminals continue to increase, and the proportion of 5G modules and vehicle gauge-level modules in high-value, large-particle scenarios is further improved. In August, the company won 50% of China Mobile Limited's current largest collection of 5G modules, fully verifying the leading strength of the company's high-value scene modules. In terms of production capacity layout, the company plans to raise 1.061 billion yuan to build 20 production lines in Changzhou with an annual production capacity of 90 million pieces, and half of the production lines have been completed. On October 15, the company signed a cooperation agreement with partners on plant construction and repurchase. The amount of agent construction does not exceed 400 million yuan, and the repurchase will be completed within 5 years after delivery.
The leading position is maintained, and the scale effect continues to appear. The company's 5G cellular module has been certified by 91 operators in many countries and regions, and nearly 30 5G modules have been developed. The company actively promotes the ecological construction of C-V2X in terms of car gauge-level modules. Benefiting from the dividend of the Internet of things, the module industry will maintain 30% growth in the future. We are optimistic about the company's leading position, and profit growth is expected to exceed 50% in the next five years.
Profit adjustment and investment advice
We adjust the company's profit forecast according to the third quarter results to increase the company's inventory and fixed assets. It is estimated that the company's revenue from 2021 to 2023 will be 10.996 billion yuan (+ 21.46%) / 15.741 billion yuan (+ 17.15%) / 22.11 billion yuan (+ 14.28%) respectively, and its net profit will be 434 million yuan (+ 5.6%) / 789 million yuan / 1.378 billion yuan respectively. The target market capitalization is set at 43 billion yuan in 2022. Maintain a "buy" rating.
Risk hint
The promotion of 5G falls short of expectations; the expansion of overseas markets falls short of expectations; and increased competition leads to a decline in gross profit.

A total of 25 agencies have rated the stock in the last 90 days, including 18 buy ratings and 7 overweight ratings; the average institutional target price in the past 90 days is 209.09; according to the Securities Star valuation analysis tool, the good company of Mobile Communications (603236) has a rating of 3.5 stars, a good price rating of 2 stars and a comprehensive valuation rating of 3 stars.