[买入评级]HYTERA COMMUNICATIONS(002583):VISIBLE GROWTH OF PRIVATE BROADBAND NETWORK BUSINESS;REITERATE.

时间:2017年11月15日 10:00:11 中财网


Key takeaways
We visited Hytera and found visible growth outlook for its privatebroadband network business. Its R&D in public broadband products isadvancing steadily, and its experimental network has been launched.
In addition, Hytera is exporting to Angola large quantities of terminalsintegrating broadband and narrowband networks. We believe themarket size of private broadband network will likely be 3-5x that ofprivate narrowband network. Hytera tailors its products to clientdemands, focusing on technologies integrating broadband &narrowband private networks, and enjoys first-mover advantage inthe market. We believe that revenue from related products mayexceed hundreds of millions in RMB value in 2018, though they wereonly launched in 2017. More orders are likely to emerge in 2019.
Demand for private broadband network and integratedsolutions will likely increase, expanding the market size ofprivate network. Compared to private narrowband network,broadband one requires >10x base stations to cover the samearea. We estimate broadband private network market size willbe 3-5x bigger than narrowband, thereby improving Hytera’sgrowth potential.
Private and public broadband network differ in technologicalrequirement. Private broadband network is more demanding ofuploading speed to transit real-time video to control centers. Soprivate broadband network cannot be based on public networksbut needs to be run on an independent network.
Hytera tailors its products to client demands and enjoysfirst-mover advantage in the market, and leads the market inbroadband related business.
Recommendation
We maintain earnings forecast. Private broadband network businessimproves the visibility of Hytera’s earnings outlook and expands themarket room of private network. We raise TP by 30% to Rmb26 (31x2019e P/E)。 Improving international competitiveness should boost itsmarket share in the long term. We believe that its market shareexpansion has just started. Reiterate BUY.
Risks
Lack of large-scale private broadband network construction.
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