\u3000\u3000 Gigadevice Semiconductor (Beijing) Inc(603986) (603986)
Core view
Event: the company issued the announcement of annual performance increase in 2021.
In 2021, the annual performance was bright, and Q4 fell month on month, or due to the impairment of goodwill. The company expects to realize a net profit attributable to the parent company of RMB 2.28-2.42 billion in 2021, with a year-on-year increase of + 158.88% to + 174.78%; The net profit attributable to the parent company after non deduction was about RMB 2.167-2.307 billion, with a year-on-year increase of + 290.25% to + 315.46%. 2021q4 is expected to realize a net profit attributable to the parent company of RMB 632-772 million, with a year-on-year increase of + 204.11% to + 271.49% and a month on month increase of – 26.74% to – 10.51%.
NOR flash remains the leader and looks forward to the increase in the proportion of large capacity and automobile industry. The trend of upgrading nor flash to high-capacity is obvious. The company has launched 512MB, 1GB and 2GB high-capacity SPI nor flash products to fill the domestic gap. In terms of automotive applications, the company’s gd25 SPI nor flash fully meets the vehicle specification level aec-q100 certification, the 2G high-capacity products of GD55 have also passed the vehicle specification certification, and the 2mb-2gb capacity of the company’s SPI nor flash vehicle specification level products is fully paved. In downstream applications, the sales proportion of NOR flash products in industrial and automotive markets continues to increase.
Benefiting from the lack of core and domestic substitution, MCU has a large volume. In 2021, the company’s MCU products increased quarter by quarter. From January to September 2021, the company’s MCU business revenue was 1.591 billion yuan, a year-on-year increase of + 222.03%, accounting for 25.14% of revenue. It is expected that the contribution of MCU products in automobile, industry and other fields will continue to improve in 2022. The company’s MCU products have strong demand in fields and application scenarios (including power grid) with high requirements for performance and reliability, and are expected to continue to grow.
The proportion of self-developed DRAM is expected to increase significantly, driving the overall gross profit of DRAM upward. The company announced that in 2022, it is expected to purchase DRAM from the related party Changxin storage, with a OEM amount of about US $135 million. From January to November 2021, the company purchased DRAM from Changxin storage, with an actual amount of US $30 million. The estimated purchase amount in 2022 is 4.5 times of the total amount from January to November in 2021, and the self-developed DRAM has entered the accelerated volume period.
In 2022, the production capacity will continue to expand to ensure the growth of the company’s revenue. Because the supply chain is affected by factors such as equipment, raw materials and power restriction, the growth progress of 2021q3 production capacity is slightly delayed, and the company’s production capacity is expected to be opened in the first half of 2022. The capacity supply in 2022 is expected to be better than that in 2021, ensuring the continuous growth of the company’s performance.
Profit forecast: we expect the net profit attributable to the parent company in 2021, 2022 and 2023 to be RMB 2.342/30.62/3.578 billion respectively, corresponding to 30 / 23 / 20 times of the share price PE on January 26, maintaining the “buy” rating.
Risk tip: the supply and demand pattern of the industry has improved, the product R & D is less than expected, and the customer expansion is less than expected.
