Hongda Electronics specializes in tantalum capacitors, and its downstream customers are mainly aerospace military industry group.
In 2020, the company's comprehensive gross profit margin is 69%, net interest rate is 37%, return on net assets is 25%, and its profitability is excellent;
High performance growth. Last year, revenue and net profit increased by 65% year on year. In the first half of this year, revenue increased by 77% and net profit increased by 1 10%, maintaining a high performance growth rate.
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management mode
Hongda Electronics specializes in tantalum capacitors, which are divided into non-solid electrolyte tantalum capacitors and solid electrolyte tantalum capacitors, mainly used in military products; Other products mainly include ceramic capacitors, inductors and power modules. , mainly used in the civilian market, the company is also actively exploring.
The company's performance maintained rapid growth, with revenue of 26,543.8 billion yuan and net profit of 79 million yuan in 2065,438+03. Last year, revenue reached 654.38+04 billion, up 6.6 times, and net profit reached 480 million, up 6 times. The revenue drive comes from two aspects, one is the sustained high growth of tantalum capacitors, and the other is the category expansion of non-tantalum components.
According to the company's 2020 annual report, the comprehensive gross profit margin reached 69%, up 2.42 percentage points year-on-year; The net interest rate reached 37%, up by 1. 16 percentage points. From the perspective of product structure, the main reason is that the military products with higher gross profit margin grow rapidly, which drives the profit rate to increase.
It can be seen that the growth of the company is not a model of exchanging quantity for price, but a healthy model of rising quantity and price. The company's return on net assets has increased to 25.23%, and its profitability has reached a big step.
At the same time of rapid growth in performance, operating cash flow increased by 265,438+00.81%year-on-year. Although less than the net profit, but compared with the past few years, there has been a significant improvement. This shows from the side that the capital flow of the military industry chain has been greatly improved after the revision of the Military Equipment Regulations.
The company's accounts receivable grew rapidly, mainly benefiting from the rapid growth of military orders. The turnover days of accounts receivable are more than 300 days, and the turnover days of inventory are close to 400 days. This shows that the company is slow to collect money, and it is necessary to keep a large amount of inventory at all times to meet the needs of customers.
This is because the downstream customers are large military industrial groups, and the company's industrial chain has a weak voice. Although accounts receivable and inventory take up a lot of cash, from the perspective of the company's cash flow, it has no impact on the overall operation.
In addition, the company only has a short-term loan of 5.5 million yuan, and its liabilities are mainly reflected in upstream accounts payable and employee compensation. Capacity expansion and dividends are earned by the company itself, which proves once again that the company is not short of money and its cash flow is very healthy.
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Capacitor industry chain
Capacitors store and release electric energy in the form of static electricity, which is separated by the medium between the two conductive substances and stored between the two poles. Its main functions are charge storage, AC filtering or bypass, cutting off or preventing DC, providing tuning and oscillation, etc. Capacitor is one of the three passive electronic components and an indispensable basic component in electronic circuits, accounting for about 40% of all electronic components.
Upstream
Mainly metal aluminum, tantalum, copper, ceramic powder and other materials used to prepare capacitors. Among them, aluminum, copper and other commodities are common, while tantalum and high-temperature ceramic powder are scarce. Therefore, capacitors made of these two materials have special uses and high value.
middle reaches
According to different materials and functions, finished products can be divided into ceramic capacitors, aluminum electrolytic capacitors, tantalum capacitors and thin film capacitors.
Judging from the global market share of various capacitors in 20 19, ceramic capacitors account for 52% of the above four main capacitors. Ceramic capacitors can be divided into single-layer ceramic capacitors (SLCC) and multi-layer ceramic capacitors (MLCC).
In ceramic capacitors, MLCC not only has low equivalent resistance, high voltage/high temperature resistance, long life, small size and wide capacitance range, but also is widely used in the downstream, and its market scale accounts for about 93% of the whole ceramic capacitors. In the MLCC category, Murata Corporation and Guo Ju Electronics Corporation of Taiwan Province Province, China have mastered advanced technology and huge production capacity, which play an important role in the industry.
lower reaches
The downstream industry is mainly divided into military market and civilian market.
The military market is mainly used in aerospace, radar, missiles and other high-precision fields, and it needs to be able to work continuously in extremely harsh environments (high temperature, below zero). Therefore, it is very dependent on the reliability of the capacitor. The main demand in this field is high performance and high quality tantalum capacitors and high temperature ceramic capacitors.
The civil market space is very broad. Almost all electronic devices such as smart phones, tablet computers, computers, wearable devices and household appliances need capacitors, among which multilayer ceramic capacitors (MLCC) occupy more and more market share.
In the A-share market, there are five listed companies specializing in capacitors: main characteristic tantalum, ceramic capacitor manufacturer Hongda Electronics, high-temperature ceramic capacitor manufacturer Hongyuan Electronics, thin-film capacitor manufacturer Farah Electronics, ceramic capacitor manufacturer Torch Electronics and Fenghua Hi-Tech with the largest MLCC capacity.
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Growth momentum
Hongda Electronics attaches great importance to research and development, and its technology is relatively advanced, benefiting from the rapid growth of the dual-use market.
Military electronics
With the improvement of China's overall scientific and technological level, advanced equipment is installed in batches, and the informationization rate of military equipment is rapidly infiltrating, and the demand for upstream electronic components is rapidly increasing.
According to the forecast of Forward-looking Industry Research Institute, by 2025, the military electronics market in China will reach 501200 million yuan, with a compound growth rate of 9.3%.
capacitor
The application market of civilian capacitors is much broader than that of military capacitors. In addition, with the continuous penetration of consumer electronics, the rapid popularization of 5G, the Internet of Things connecting everything, and the outbreak of new energy vehicles, it has a positive impact on the pull of electronic components.
According to the statistics of China Electronic Components Industry Association, the global capacitor market reached $22 billion in 20 19, and the capacitor market in China was1/kloc-0.02 billion yuan, accounting for more than 70% of the global total, making it the largest capacitor market in the world.
The growth rate of capacitor market in China is much higher than the global average. It can be said that the increase of capacitors is in China. As long as there is technology and production capacity, there is no fear that the products will not be sold.
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abstract
Hongda electronic technology is leading and has been deeply involved in military electronics for more than 20 years. Its profit margin is obviously higher than that of its peers. In recent years, its performance has grown rapidly and its profitability is excellent.
The core competitiveness to promote the rapid growth of performance lies in R&D capability. The company has obvious advantages in tantalum capacitors. In recent years, it has been very successful in expanding into the civilian market, in which ceramic capacitors and microcircuit modules have increased rapidly, forming new performance drivers.
There are two main points in the future of HTC. One is order-driven under the high prosperity of military industry; The second is whether the high growth of the civil market can be sustained.
Judging from the performance disclosed in the interim report, the net profit increased by 1 10% year-on-year, which maintained the high growth since last year and also supported its large increase in the previous period.
The company has performed well since 20 19, with a compound growth rate of 43.69% in three years, which is very fast, and can be used as a reference for PEG, a commonly used valuation index for growth stocks.
As of September 3, the market value of the company was 34.4 billion, and the corresponding PE-TTM was 50 times. According to the unanimous forecast of brokers, the annual net profit was 570 million, up 57% year-on-year, corresponding to a valuation of 45 times.
At present, PEG is 1. 14, which is close to reasonable estimation from the data. However, considering that the brokerage report usually hits full expectations, and the previous increase is huge, and there are many profit-making discs, once there are signs of trouble, it may usher in a big callback. Conservatively speaking, if PEG can fall below 0.8, the safety margin will be large.