Industrial Fulian (601138) Investment Value Analysis Report-Manufacturing giant leads the wave of industrial interconnection 5G + cloud core benefits target

Industrial Fulian (601138) Investment Value Analysis Report-Manufacturing giant leads the wave of industrial interconnection 5G + cloud core benefits target

The company is a global electronics manufacturing and industrial Internet giant, actively transforming from traditional electronics manufacturing to industrial Internet intelligent manufacturing services, with huge growth potential.

It is expected to fully benefit from the 5G + cloudification trend in the future.

We predict that the company’s EPS for 2019-21 will be 0.

90/1.

00/1.

15 yuan, corresponding PE is 18x / 16x / 14x.

Covered for the first time, giving “overweight” rating.

After going through the storms, it has become a global leader in electronics manufacturing.

The company is the world’s largest electronics industry technology manufacturing service provider, and actively explores in the industrial Internet field.

In recent years, the company’s revenue has presented a growing trend. In 2018, the main business products of communication network equipment / cloud service equipment increased by 20 respectively.

82% / 27.

27%.

At present, the company has its own industrial cloud, 5 unmanned factories, 10 light-off production lines; intelligent and automated production ranks in the leading position in the industry.

The company is the core beneficiary of 5G and cloudification.

The commercialization of 5G networks in 2019 has driven capital spending in the communications industry and stimulated demand for related equipment products.

According to OVUM’s forecast, through the expansion of the scale of 5G construction, the capital expansion of global operators will return to growth, reaching 203.5 billion US dollars in 2022.

The company’s 5G CPE has achieved mass production migration, 5G universal modules, and 5G small base stations have all received orders from core customers.

In the first half of 2019, the company’s cloud service equipment increased by 15%, and it increased against the trend due to the overall fluctuation of the industry.

We believe that the industry’s prosperity is gradually recovering, and the company’s cloud service equipment business will continue to maintain rapid growth next year.

According to the IDC report, 5G smartphone expansion will account for 8% of total smartphone shipments in 2020.
.

9%, reaching 1.

23.5 billion units.

The development of 5G will also bring a wave of smartphone replacements, and the company’s mobile phone component business will benefit.

The pioneer of the industrial Internet platform, the integration of software and hardware creates a new industry ecology.

According to estimates by experts from the Prospective Industry Research Institute, the size of the domestic industrial Internet in 2018 is about 5,313 trillion, and it will reach one trillion in 2023.

Foxconn’s accumulated technology and experience for many years has changed the pattern of advanced manufacturing in the world. The transformation of the Industrial Internet is the inevitable development of Foxconn for 30 years.

Foxconn has used the “fog cerebellum + Foxconn industrial cloud platform + professional cloud” to create an industrial Internet platform with all elements, the entire industry chain and the entire value chain.

We are optimistic that in the next five to ten years, Foxconn Group will successfully transition to the ecological model of “smart manufacturing + industrial Internet 杭州桑拿 platform”.

Risk factors: market fluctuation risk of downstream products; exchange rate fluctuation risk; associated transaction risk.

Investment suggestion: As a leading company in the electronics manufacturing industry, the company responds to technological development trends, actively transforms itself into an industrial Internet company, and gradually starts a new business growth engine. We predict that the company’s EPS in 2019-21 will be 0.

90/1.

00/1.

15 yuan, corresponding to a forecast of 178 net profit in 2019-21.

57/198.

254/227.

98 million, corresponding to 18x / 16x / 14x PE in 2019-21.

Covered for the first time, giving “overweight” rating.