(Report Producer/Author: Pacific Securities, Ma Jie, Liu Qianqian, Ma Haoran)
First, the military electronics national team, the industry leader in the frequency industry
Chengdu Tianao Electronics Co., Ltd. (hereinafter referred to as "Tianao Electronics") is mainly engaged in the research and development, design, production and sales of time frequency products and Beidou satellite application products. As a leading domestic time and frequency enterprise, Tianao Electronics has a complete time frequency product line, with time and frequency system integration capabilities, can provide a complete time and frequency solutions, the main products include atomic clocks, crystal devices, frequency components and equipment, time frequency boards and modules, time synchronization equipment and systems, etc., mainly used in aerospace, satellite navigation, military and civilian communications and national defense equipment and other fields, for the mainland manned spaceflight, lunar exploration engineering, Beidou satellite navigation system and so on to provide the main time frequency equipment and systems.
(1) Backed by the strength of CLP Ten, the time frequency series products are leading in China
The predecessor of the company was Chengdu Tianao Electronics Co., Ltd., which was registered and established in January 2004, and was changed to Chengdu Tianao Electronics Co., Ltd. in 2010.
The company's largest shareholder is the Tenth Research Institute of China Electronics Technology Group Corporation (hereinafter referred to as "CLP Ten Institute"), with a shareholding ratio of 43.30%. CLP Ten Institute is the first comprehensive electronic technology research institute created after the founding of New China, belongs to the national first-class scientific research institutions, mainly engaged in the development, production and after-sales service of military electronic equipment and information systems, and now takes intelligence information systems and avionics information systems as the core main business, covering communications and data links, aerospace electronics, identification of friend or foe, guidance and radar and other professional fields.
After more than ten years of development, the company has now become one of the main enterprises in the research and development and production of military time frequency products with strong comprehensive strength, complete product range and leading technical level, and is the main supplier of atomic clocks and military time synchronization equipment and systems in the mainland. At present, the company's main products can be divided into three categories: frequency series products, time synchronization products and Beidou satellite application products. Among them, the frequency series products mainly include atomic clocks, crystal devices, frequency components and equipment; time synchronization series products mainly include time frequency boards and modules, time synchronization equipment and systems; Beidou satellite application products mainly include Beidou satellite watches, Beidou application terminals and systems.
The company's time and frequency series products are leading in terms of technical performance in China, and have now formed a series of products such as airborne, ground, vehicle-mounted, and ship-borne products, which are mainly used in aerospace, satellite navigation, military and civilian communications and national defense equipment, and provide important guarantees for major national projects such as military-civilian integration of national time-frequency system construction, manned spaceflight, lunar exploration projects, Beidou satellite navigation systems, and Mars exploration.
(2) The proportion of military products business has increased, and R&D investment has continued to expand
Since its listing in 2018, the company's operating income has increased from 864 million yuan to 916 million yuan, and the highest attributable net profit reached 111 million yuan in 2019. In 2020, due to the impact of the new crown epidemic, the current production capacity of the company's core products was limited, and the delivery pressure increased, resulting in a net profit of 8.98% lower than the same period last year. In order to overcome the adverse effects of the epidemic, the company continued to deepen the military market in the case of the decline in civilian revenue, and the newly signed military contracts maintained rapid growth, and the proportion of military business revenue has exceeded 80%.
In recent years, the company's overall comprehensive gross profit margin level has been maintained at about 30%, and the proportion of R&D expenditure in operating income has continued to increase, from 7.59% in 2018 to 8.82% in 2020, mainly invested in cold atomic clocks, spaceborne rubidium clocks, chip atomic clocks, high-precision time-frequency synchronization systems and other key time-frequency products and cutting-edge technology research on time-frequency applications. As of December 31, 2020, the company has a total of 95 patents (including 53 invention patents, 21 utility model patents, and 21 appearance patents) and 12 software copyrights. In addition, the company has also set up a special technology innovation center to accelerate technological transformation, improve the development and application capabilities of new products, new technologies and new equipment, improve and strengthen the software and hardware equipment of the technology research and development department, and continuously improve the company's technological innovation capabilities.
From the perspective of revenue and gross profit structure, the frequency series products account for the largest proportion, followed by the time synchronization series products. From the financial data of the 2020 annual report, it can be seen that the frequency series products and the time synchronization series products accounted for 98.69% of the total operating income and 99.25% of the total gross profit, which is the company's most important source of revenue and profit.
(3) Optimize the layout of production capacity of fundraising projects, and equity incentives are conducive to long-term development
The use of funds raised by the company's IPO mainly revolves around the main business, including the industrialization construction project of atomic clocks, time synchronization products and Beidou satellite applications, and at the same time supporting the construction of technology research and development centers to enhance the level of technology research and development and further enhance the company's comprehensive competitiveness. We believe that these projects help to maintain the company's product advantages in the field of time frequency and Beidou satellite applications, in line with the company's development strategy, with the fundraising projects continue to reach production, the company's overall profitability is expected to reach a new level.
In December 2021, the Company issued a draft restricted stock incentive plan (draft) to grant 5 million shares to a total of 88 directors, senior management personnel and business backbones, representing approximately 2.40% of the company's total share capital. Among them, 4.6 million shares were granted for the first time, accounting for 92.00% of the total restricted stock grant of the plan and 2.21% of the total share capital of the company; 400,000 shares were reserved, accounting for 8.00% of the total restricted stock grant of the plan and 0.19% of the total share capital of the company. Restricted shares are granted at a price of $17.49 per share.
We believe that the implementation of the restricted stock incentive plan will help to fully mobilize the enthusiasm of management and key employees, which is conducive to the company's medium- and long-term development. (Source: Future Think Tank)
Second, the time frequency industry is in the ascendant, and the domestic substitution space is vast
"Time" is the most basic physical quantity to characterize the movement of matter, while "frequency" is the number of periodic movements per unit of time, which is a basic quantity closely related to "time". The physical definitions of time and frequency are reciprocal and conceptually inseparable. Modern time is generated and maintained by a high-stable frequency source, and the accuracy of the frequency determines the accuracy of time, and time and frequency are often linked together called "time frequency" or "time frequency". With the progress of science and technology, time frequency has developed into one of the important supporting technologies of information technology and plays a decisive role in the field of national defense science and technology, national economic construction, and social life.
The upstream of the industrial chain of the time and frequency industry is the electronic components manufacturing industry and the metal products industry, and the downstream is mainly the national defense science and technology fields such as weapons and equipment, aerospace, military communications, and satellite navigation, and the national economic fields such as communications, electric power, transportation, and the Internet of Things. In the upstream of the industrial chain, the electronic components manufacturing industry and the metal products industry are all perfectly competitive markets, the technical level is relatively mature, there are many suppliers and sufficient production capacity, so the time frequency industry is affected by the fluctuations of the upstream industry is very small. In the downstream of the industrial chain, time frequency products are widely used, and there is a wide customer base and sustained growth in the field of national defense science and technology and the national economy, and there is no situation of major dependence on a single customer.
The time frequency industry is the key and core field of electronic information manufacturing, providing basic products and technical support for other sub-industries of electronic information manufacturing industry such as computer equipment manufacturing, communication equipment manufacturing industry, radio and television equipment manufacturing industry, radar and supporting equipment manufacturing industry. An independent time frequency system is related to national security and core interests. The world's major developed countries attach great importance to the construction of the time frequency system, and the United States and Russia have built an independent and complete national time frequency system. The development time of the mainland time frequency industry is relatively short, the foundation is relatively weak, the timing application has long relied on GPS, and the high-end time frequency products rely heavily on imports. At present, the mainland is building and perfecting a national time and frequency system with the satellite navigation system timing as the leading role and the wireless, network, and other timing means as the auxiliary, and the construction of the time-frequency system includes punctuality, timing, time use, measurement calibration, and monitoring. The huge demand for time-frequency core components and time synchronization boards, modules, devices and systems will drive the rapid development of the entire time frequency industry.
(1) Focus on the core components of the time and frequency, and break through the key links of autonomous control
In the time frequency products, the frequency products with atomic clocks and crystal devices as the core to generate stable frequency signals, frequency components and equipment synthesize, transform, filter and amplify the frequency signals, etc., generate and output various types of frequency signals required for electronic systems, and expand the frequency coverage. Time synchronization products use atomic clocks or highly stable crystal oscillators as frequency sources, and product types include boards, modules, devices, and systems. Time frequency boards and modules can be embedded in each user device and system, and together with the time synchronization device to form a time synchronization system.
1. Atomic clock
Atomic clocks are the product of the combination of modern quantum mechanics and electronics, which use the frequency of electromagnetic waves emitted or absorbed by transitions between different energy levels of atoms as a standard, and have the characteristics of high accuracy and high stability. Before the birth of the atomic clock, humans used the rotation or rotation period of the earth as the unit of time (astronomical time). People usually use clocks and watches, high precision will be about 1 minute error every year, which has no impact on daily life, but in the highly demanding scientific research, production needs more accurate timing tools. At present, the most accurate timing tool in the world is the atomic clock, the atomic clock is the use of electromagnetic waves emitted when the atom absorbs or releases energy to time, because this electromagnetic wave is very stable, coupled with the use of a series of precision instruments for control, the timing of the atomic clock can be very accurate.
According to the different types of atoms selected by the atomic clock, the atomic clock can be divided into hydrogen atomic clock, cesium atomic clock, rubidium atomic clock and so on. As a first-level frequency standard, cesium atomic clock is a time generation, maintenance, and traceability equipment; in the field of aerospace, weapon systems, and other national defense fields, it provides a high-precision time benchmark for all kinds of measurement and control systems and weapon platforms, guarantees the precise control and precision strike of the system, and can also provide a more reliable and more accurate way of upgrading and using satellites to tame high-performance rubidium clocks, so as to meet the strategic needs of the mainland's national defense construction. In the field of civil communications, the standard time frequency signals produced by cesium atomic clocks provide a unified benchmark for the machine room equipment of the master node of the communication network. Rubidium atomic clocks are widely used as high-precision frequency sources for communication synchronization networks in provincial bureaus and hub centers. With the improvement of the accuracy requirements for time synchronization between communication base stations, a large number of rubidium atomic clocks need to be used as frequency standards to improve the performance of communication systems. In the synchronous power grid, cesium atomic clocks and rubidium atomic clocks provide high-precision time references for the power grid management centers of various regions and the power grids of various large power stations.
The main manufacturers of atomic clocks are Symmetricom Corporation, OSA Corporation, Aerospace 203 Institute and so on. Cesium atomic clocks were first produced by Symmetricom in the United States and OSA in Switzerland, and export controls were imposed. At first, almost all of China's cesium atomic clocks for engineering relied on imports, but in recent years, they have gradually broken through the technical bottleneck and realized the engineering production of cesium atomic clocks. Rubidium atomic clock is currently the most widely used atomic clock in the project, and the production of rubidium clocks abroad is mainly concentrated in the United States Symmetricom Company, FEI Company, Swiss SpectraTime Company and Russia Kvarz Company. The main domestic units engaged in rubidium clock production research are Peking University, Wuhan Institute of Wushu, Aerospace 203 Institute and Tian'ao Electronics, and the overall technical performance has reached the international advanced level. CPT atomic clock based on the coherence of atoms and laser captivity theory, is a new type of atomic clock developed in recent years, at first only the United States Symmetricom company can achieve SA.45CPT atomic clock mass production, with Peking University, Wuhan Institute of Physics and Tianao Electronics and other units have successively carried out CPT atomic clock research work, the current mainland independent research and development of CPT atomic clock has also entered the mass production state.
Tianao Electronics is a major batch production enterprise of atomic clocks in China, and has successively launched a series of rubidium atomic clocks to meet the needs of aerospace, satellite navigation, and military and civilian communications; it has taken the lead in launching laser-pumped small cesium atomic clocks in China; and the spaceborne atomic clock physical system developed and produced has been applied to the Beidou-3 navigation satellite system, and its technical performance has reached the international advanced level.
2. Crystal devices
Crystal devices are frequency selection and control devices made of piezoelectric quartz crystals, which are mainly divided into three categories: crystal resonators, crystal oscillators, and crystal filters. Crystal resonator refers to a quartz crystal resonator made of quartz material, which mainly plays the role of generating frequency, has the characteristics of stability and good anti-interference performance, and is widely used in various electronic products. A crystal oscillator is a special element in the oscillator, a quartz crystal, that can produce a highly stable signal. A crystal filter is a filter composed of crystal resonators that has superior performance in terms of frequency selectivity, frequency stability, transition band steepness, and insertion loss.
Crystal devices are widely used in communications, navigation, radar, reconnaissance, measurement and control and other military electronic equipment systems. Among them, military navigation systems require crystal oscillators as frequency sources for guidance, positioning, and punctual systems. In the radar system, it is necessary to have a high-short stability or low phase noise crystal oscillator, frequency synthesizer to improve the detection distance and accuracy of the radar; in Doppler radar, it is necessary to use the Doppler effect to distinguish between the target and the clutter, which puts forward higher requirements for the crystal oscillator and frequency components; in satellite systems, deep space exploration, and military communications, crystal devices and frequency components are required to improve the overall performance of electronic equipment; the new generation of airborne electronic equipment needs to have high precision, wide operating temperature range, Crystal oscillator series products with high reliability and other characteristics as a frequency source, to solve the problem of localization of core frequency devices, to meet the future development needs of weapons and equipment; carrier communication, radio communication, remote sensing telemetry and other military electronic equipment, the need for high frequency selectivity of crystal filters for medium frequency filtering, in order to effectively improve the sensitivity of the system or the whole machine and anti-interference ability. What cannot be ignored is that most of the crystal devices used in these military electronic equipment are still dependent on imports, and it is impossible to ensure the independent support capability of military electronic equipment. Therefore, the localization of high-end crystal devices has a very broad space for substitution.
The main manufacturers of crystal devices are Symmetricom Corporation, Rakon Corporation, Aerospace 203 Institute, Chenjing Electronics and Haichuang Electronics. Tianao Electronics is one of the main research and development and production units engaged in piezoelectric crystal devices in China, participating in the formulation of national standards for a number of crystal components, focusing on the development of high-end crystal devices, with precision crystal resonators, SMD crystal oscillators, constant temperature / temperature supplementary crystal oscillators, crystal filters and other full range of products, ultra-low phase noise technology, anti-shock vibration technology, high frequency broadband linear phase technology to reach the international advanced level.
3. Frequency components and equipment
Frequency components and equipment refer to the atomic clock and crystal oscillator and other high-precision frequency sources as the reference, through phase locking, distribution, amplification and other processing, output multiple high stability, low phase noise standard frequency signals, the formation of frequency standard equipment. Frequency standard equipment is widely used in electronic systems such as communications, navigation, and radar, and is developed simultaneously along with the technological progress of atomic clocks and high-stability crystal oscillators. In addition, through the synthesis, transformation, filtering and amplification of frequency signals, the coverage of frequency signals is expanded, and the application field of time frequency technology is also expanded.
In the military communication network, in order to adapt to the frequency hopping communication system, narrowband filtering technology and optimized frequency distribution have been adopted to achieve high-performance frequency selection and rapid frequency switching, forming a frequency hopping filtering equipment, solving the electromagnetic compatibility problem of multiple devices working at common addresses in the military ground, vehicle, ship-mounted, and airborne communication networking systems, improving the utilization rate of system frequency resources, and ensuring the normal operation of communication links. In the field of civil communications, mobile communication transmission networks mainly transmit through optical fibers and microwaves, and use microwave transmission in situations where optical fibers cannot be laid. With the advent of the 5G era, the number of transmission network channels using microwave methods cannot meet the increasing demand for the number of users and the increase in information capacity, and it is necessary to increase the number of channels to meet the expansion requirements. In order to achieve multi-channel signal synthesis and avoid mutual interference between channels, frequency selection and distribution between channels must be carried out. To this end, domestic and foreign communication equipment manufacturers have developed frequency selection and distribution equipment (Branch), and there are currently mainly Japanese NEC and other companies for mass production.
Tianao Electronics has the independent research and development and production capacity of core frequency source products, on the basis of which the frequency components and equipment technology performance are leading in China, and the products are widely used in airborne, vehicle-mounted, ship-borne and other weapons and equipment platforms and a number of major national defense projects, and high-end frequency selection and distribution equipment (Branch) continues to supply Huawei.
4. Time synchronization products
Time synchronization is the process of taking the external stability signal as the standard and achieving a unified time scale for the distributed system after certain operations. Its working principle is to use a stable frequency signal as a reference, such as an atomic clock or a highly stable crystal oscillator, and then regularly calibrate other times in the unified system to ensure that the time around the unified system is maintained at a small error. In a distributed system, due to physical dispersion, the system cannot provide a unified global clock for modules that are independent of each other, and each process or module maintains its own local clock. Due to inconsistencies in the timing rate and operating environment of these local clocks, even if all local clocks are calibrated at some point, these local clocks will be inconsistent after a period of time. In order for these local clocks to reach the same time value again, time synchronization operations must be performed.
High-precision timing is the key to achieving time synchronization, and the world's major developed countries attach great importance to the construction of timing systems. The United States began to build a global positioning system (GPS) in 1973, and gradually expanded from military to civilian, and GPS timing has become a widely used time synchronization technology in the world. Since the 1970s, the mainland has successively established an independent atomic time system, as well as a long-wave, short-wave timing system, Beidou satellite navigation system, and other important infrastructure of national science and engineering, forming a timing system with satellite timing as the mainstay and ground timing as the supplement. Because the Beidou satellite timing has the advantages of autonomous control, high timing accuracy, wide coverage of the region, and ease of use, it has been widely used in the military and civilian fields.
In modern warfare, the communications, navigation, radar, electronic countermeasures, and other electronic equipment of various weapon platforms require high-precision time-frequency synchronization to ensure that they work under the same time-frequency standards to meet the requirements of weapon launch, ballistic measurement and control, early warning and detection, carrier aircraft navigation, precision strikes, data links, digital communications, intelligence reconnaissance, air defense and anti-missile, identification of friend and enemy, and coordinated operations.
In addition, time synchronization products also play an extremely important role in the time synchronization network and billing and monitoring business systems of communication networks, which is crucial to the normal and stable operation of communication networks. In the rail transit (subway, high-speed rail) integrated monitoring system, time synchronization equipment for communication, dispatch, traffic signals, disaster prevention alarms, mechanical and electrical equipment, electrical monitoring and other professional systems to provide a unified timing signal, for OCC (control center), station, depot and other departments to provide unified time information, while requiring the time between the stations on the whole line must also be completely unified, time synchronization equipment to ensure that the rail transit operation timing accurate, improve the quality of operation services has played an important role. In the radio and television industry, the front-end multiplexers in the digital television signal transmission system, the modulators of the transmission station and other equipment need satellite synchronization clocks to provide precise time and frequency synchronization to ensure the image quality of television programs. In the radio and television broadcasting system, time synchronization is the key to the coordinated work of the entire broadcast system, such as the display of the standard Beijing time of each channel, the punctual broadcast of each channel television program, the system time synchronization of the hard disk broadcast system, the system time synchronization of the DVB broadcast system, the synchronization of the news live broadcast time, and even the standard time synchronization of the whole station.
With the support and application of Beidou timing technology at the national level, the mainland time synchronization products have developed rapidly, and have been widely used in national defense science and technology and important fields of national economy. In the military field, Tianao Electronics has a full range of product lines such as time synchronization boards, modules, equipment, and systems, and is the main supplier of time synchronization products for the continental army, and its products are widely used in aerospace measurement and control, weapons and equipment, and other fields.
The company's time synchronization series products are mainly divided into two categories: time frequency boards and modules and time synchronization equipment and systems. Time-frequency boards and modules take the standard time and frequency signals as references to generate, maintain, and distribute various time and frequency signals required by system equipment; time synchronization equipment and systems generally generate and maintain time frequency signals by receiving Beidou/GPS/standard time information, and receive or transmit them by wired or wireless means, providing the system with various forms of time and frequency signals.
Tianao Electronics provided a large number of time-frequency systems for the aerospace measurement and control system of the original assembly test base, participated in and completed the time-frequency synchronous support for major aerospace tasks such as "Shenzhou", "Tiangong", "Chang'e", and "Tianwen", provided a large number of time-frequency equipment for users of various services and arms, guaranteed the accuracy and performance indicators of weapon system tests, and met the military needs of coordinated operations. (Source: Future Think Tank)
(2) Expand satellite application terminal products and fully benefit from the industrialization process of Beidou
With the acceleration of the industrialization process of Beidou, relevant domestic enterprises have actively laid out in all aspects of the industrial chain such as satellite navigation chips, equipment, system integration, and operation services, and their applications involve disaster prevention and mitigation, marine fisheries and many other fields. Tianao Electronics' Beidou satellite application products are based on the Beidou satellite navigation system, integrating communications, Internet and other technologies to meet the needs of customers in timing, positioning and emergency early warning communication, mainly including Beidou satellite watches, Beidou application terminals and systems.
Beidou satellite watch is currently recognized by the mainland military military standard timetable, for the use of military standard time to provide an effective carrier, in the military field has a stable demand. Beidou satellite watches have both high-tech and fashion characteristics, while meeting consumers' demands for brand, aesthetic and artistic and cultural connotations, and have great potential for growth in the civilian markets such as science and technology, sports, fashion, and commerce. Beidou application terminals and systems are mainly used in disaster prevention and mitigation and other emergency security fields, which can realize the timely and reliable transmission of information, and the application scenarios include but are not limited to meteorological early warning, forest fire prevention, land conservation, water conservancy monitoring, etc.
1. Beidou satellite watch
Beidou satellite watches are timed by receiving the Beidou II satellite navigation system signal, which can display latitude and longitude information, and comes with a compass, thermometer, barometer and other outdoor functions. This watch can directly obtain the time from the satellite navigation system, and the watch is synchronized with the satellite when it goes. In the military field, the Beidou satellite watch is currently recognized by the continental military as a military standard timetable, which can achieve a high degree of unity in time, especially in joint operations and integrated operations. At the same time, the Beidou satellite watch can also provide accurate position information for combat commanders and soldiers anytime and anywhere, and improve the comprehensive support level in the joint operation mode. In the civilian field, Beidou satellite watches are mainly used in sports and leisure, military culture, fashion and other civilian consumption fields.
Tianao Electronics took the lead in launching Beidou satellite watches in the mainland, and in 2018, it was awarded the title of "China's Famous Watch Brand" by the China Watch Association, and is a major supplier in the military and civilian segments of Beidou satellite watches. In 2020, the company launched a new generation of multi-functional positioning watches that support the Beidou-3 satellite, which can be applied to various sports and leisure scenarios such as running, mountaineering, and cycling, further enhancing the competitiveness of products.
2. Beidou application terminal and system
The mainland Beidou navigation system has the short message communication function that other satellite navigation systems do not have, and has the advantages of wide coverage, all-day, all-weather uninterrupted service, safety and reliability, etc., especially in the case of ground communication signal interruption, it is a reliable backup communication method. Beidou application terminals and systems have broad room for development in the fields of meteorological early warning, forest fire prevention, land conservation, water conservancy monitoring and other disaster prevention and reduction fields.
Tianao Electronics took the lead in launching the Beidou-based meteorological emergency early warning communication system in the mainland, and has carried out system construction and demonstration application in Shanxi, Fujian, Sichuan, Xinjiang and other places. In 2020, the company launched a gas transportation monitoring terminal and system based on Beidou + Internet of Things, enabling the company's Beidou terminal to expand its application in the field of Internet of Things and marine transportation.
(This article is for informational purposes only and does not represent any of our investment advice.) For usage information, see the original report. ）
Featured report source: [Future Think Tank]. Future Think Tank - Official website