The 6G era is gradually approaching.
It has been 5 years since 5G was officially commercialized in 2019, and at the rate of 10 years of the new generation, 5G has begun to enter the second half, and 6G has been put on the agenda.
Huawei expects that 6G will be commercially available after 2030. CITIC also said that by 2030, the 6G standard will be officially frozen.
So, what do you need to do in the middle of these 5 years?
R&D and infrastructure resonate at the same frequency.
In terms of R&D, behind the hundred-fold increase in network speed of 6G is to break the theoretical limit, which has very high technical barriers.
However, Continental has taken a big step forward and successfully built the world's first field test network for the integration of 6G communication and intelligence, laying the foundation for follow-up research.
Infrastructure: Just as the popularization of 5G requires enough base stations, AI computing power needs to build enough data centers, and 6G also needs supporting infrastructure.
From 2019 to 2023, the number of 5G base stations in China will increase from 130,000 to 3.377 million, with a compound annual growth rate of more than 125%. In 2023, China Mobile and China Telecom will significantly increase the number of AI servers purchased.
In the vision, 6G is a network system that can be compatible with 5G base stations and integrated with satellites and ground, so 6G is inseparable from the construction of satellite Internet and the continuous improvement of 5G.
In these fields, Higer Communications is a veritable industry leader, and there is no shortage of future growth and certainty.
So, what are the advantages of Hager Communications?
- The whole industry chain of products is covered.
Hager Communications has four businesses, wireless communication, digital intelligence ecology, Beidou navigation and aerospace, accounting for 41.36%, 36.29%, 14.53% and 6.49% of revenue in 2023, respectively.
In the field of wireless communication, the company is one of the companies with the most complete product range, covering sea, land and air.
For example, the mainland is currently accelerating the construction of satellite Internet, and it is expected to launch more than 1,000 satellites into space in 2024.
In the satellite Internet industry chain, the manufacturing value of ground equipment is more than the sum of satellite launch and satellite development, accounting for more than 50% in 2022.
The products of Higer Communication include information customs stations, terminals, chips and so on in ground equipment.
Among them, the company's self-developed chip atomic clock was successfully mass-produced, breaking the long-term monopoly of foreign countries. The company can also produce a full range of Tiantong satellite chips.
The RF chip of the world's first directly connected satellite mobile phone Mate60 released by Huawei is a product of Higer Communications, and the baseband chip is provided by Huali Chuangtong.
In the field of Beidou navigation, the company's competitiveness is more significant. Higer Communication is the first company in China with a full industry chain layout, including chips, modules, antennas, etc.
This is equivalent to the combination of BDStar, Shuobeide, Zhenxin Technology, CTI Navigation, etc., the company can better meet the needs of customers for different products and improve the supporting value.
In recent years, the company's Beidou navigation business revenue has grown steadily, achieving revenue of 937 million yuan in 2023, a year-on-year increase of 113.27%.
In the aerospace field, the company can provide parts for large aircraft and UAVs, and many aircraft manufacturers are suppliers, and they are also one of the few domestic manufacturers that have entered the supply system of Boeing, Airbus and Italian Airlines.
- R&D advantages.
Higer Communication can not only break the monopoly, but also become a number of firsts, and has long-term R&D investment to accumulate.
The company's R&D expense rate from 2019 to 2023 has been maintained at about 14%, which is much higher than that of Huali Chuangtong, BDStar, Aerospace Science and Technology and other companies in the same industry.
Not only that, but the company's R&D expense rate is also much higher than that of photoresist leaders Tongcheng New Materials, Nanda Optoelectronics, optical module leaders Zhongji Innolight, Xin Yisheng, and even North Huachuang and China Micro Corporation.
- Customer resources are abundant and high-quality.
The company's products are oriented to the military and civilian markets, and the entry threshold for the military market is very high, and the failure rate is extremely high after a long period of certification.
The general certification time can reach 3 years, which is comparable to the inspection of semiconductor equipment suppliers by wafer foundries TSMC and SMIC.
Higer has high qualifications, and most of its customers are large enterprises, such as China Mobile, China Tower, AVIC Xifei, Radio and Television Yuntong, etc. Huawei is also a customer of the company.
Among them, China Mobile occupies the position of the company's largest customer all year round, and the company's sales from China Mobile will account for 25% in 2023.
In 2023, Higer Yichuang, a subsidiary of Higer Communications' digital intelligence ecological business, won the bid for China Mobile's comprehensive network maintenance service procurement project of 2.015 billion yuan, and the project will last until 2026.
Next, where is the growth of Hager Communications?
In addition to the commercial aerospace and satellite Internet mentioned above, the expansion of Beidou Navigation to the civilian market and the rapid development of the low-altitude economy are the company's growth drivers.
First of all, Beidou navigation continues to penetrate.
Beidou navigation is a navigation and positioning system independently developed by the mainland, which was mainly used in the military market such as aircraft and aircraft carriers at the beginning.
With the increasing improvement of the Beidou navigation system, it has become an established goal to penetrate into the civilian market and realize domestic substitution.
As of 2023, smartphones such as Huawei, OPPO, vivo, Apple, Xiaomi, and Honor all support the Beidou system, accounting for more than 75%.
Continental aims to achieve a penetration rate of more than 90% by 2025 and not only in the mobile phone market, but in all areas of mass consumption and industry.
In addition, it is currently in the transition stage from Beidou 2 to Beidou 3, and the demand for related chips and terminals is also relatively large. The company's Beidou navigation products are quite abundant, and it is expected to enjoy this wave of dividends.
In general, China's satellite navigation application market is expected to maintain a compound annual growth rate of 15%, and the market size will be close to 800 billion yuan by 2025.
Second, the low-altitude economy is poised to take off.
The low-altitude economic industrial chain and the future market space have been analyzed many times in our previous articles, which is a trillion-dollar market and is on the eve of the outbreak.
Many of Hager's products are used in the low-altitude economy, such as navigation products and satellite Internet products.
The company can provide aircraft with unmanned platform all-domain, all-weather, full-scene information interconnection and high-precision location services. In 2023, the company will increase its satellite and unmanned projects by 1.9 billion yuan.
On the performance side, from 2019 to 2023, Higer Communications' revenue and net profit are growing steadily, and in the first quarter of 2024, it will still maintain a growth trend, achieving revenue of 1.144 billion yuan, a year-on-year increase of 10.67%, and a net profit of 43 million yuan, a year-on-year increase of 0.58%.
In the medium term, satellite Internet, Beidou navigation, and low-altitude economy are all tracks with great space and significant competitive advantages, and the performance is expected to continue to maintain a growth trend.
From a longer-term perspective, the 6G communication network is also a market with huge value increment, and Higer Communications has also made a layout to contribute to the company's resilience.
The above is only for the analysis of listed companies and does not constitute specific investment advice.
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Source: Flying Whale Investment Research