\u3000\u3000 Sg Micro Corp(300661) (300661)
Events
On January 28, the company estimated that the net profit attributable to the parent company in 2021 was 650-722 million yuan, a year-on-year increase of 125% – 150%, and the net profit deducted from non attributable to the parent company was 598-671 million yuan, a year-on-year increase of 126.7% – 154.1%.
Commentary
The net profit of the whole year increased rapidly in 21 years, and continued to grow month on month in the fourth quarter of the year. The company’s net profit attributable to the parent company in the whole year of 21 years was 650-722 million yuan, with a median of 686 million yuan and yoy137 million yuan 32%； The net profit attributable to the parent company of 21q4 is 199-271 million yuan, with a median of 235 million yuan (yoy286.4%, qoq22.96%). The company’s net profit continued to grow rapidly, mainly due to the active expansion of business, the improvement of product structure, the expansion of application fields and the increase of product sales.
Continue to expand categories, optimize product structure, develop high-quality customers and drive high performance growth. 1) In the 21st year, the company continued to speed up the layout of power management IC and signal chain IC. In 2021h1, 250 new products were added, and 1700 products were on sale; The sales volume of 2021q3 has increased to 1800 models, and nearly 400 new products have been launched in 2021, with a total of 3500 types of marketable products; 2) Optimization of product structure: the total proportion of high gross margin products such as industrial control, medical treatment and automotive electronics increased from 30% in 2019 to 40% in 2021h1. 3) Continuous expansion of customers: the company’s business model focuses on distribution, continues to develop new customers (with more than 3000 end customers), and reduces the dependence on single customers (the revenue proportion of the top five customers decreased from 54% in 2017 to 45% in 2020).
Continuously high R & D investment + external M & A to consolidate the market position. The proportion of the company’s core technical personnel increased from 65% in 2016 to 73% in 2020. In 2020, the proportion of R & D expenditure accounted for 17%, 3 percentage points higher than the average of large overseas simulation plants. In the first three quarters of 21 years, the R & D expenditure reached 264 million yuan, a year-on-year increase of 76.54%, and the R & D expenditure rate was 17.23%. At the same time, the company follows the successful path of Ti, continues to carry out acquisition and merger, broaden its product line, accelerate resource integration and consolidate its market position.
Investment advice
In view of the company’s continuous expansion of categories, optimization of product structure and development of high-quality customers driving high performance growth, we raised the company’s net profit attributable to the parent company from 21 to 23 to 707 / 1028 / 14 million yuan respectively, with an increase ratio of 15% / 24% / 26%, corresponding to EPS of 3.0 / 4.4 / 5.9 yuan respectively. Referring to the closing price on January 28, 2022, the corresponding PE is 92 / 63 / 48 times respectively, which is raised to the “buy” rating.
Risk tips
Downstream demand is lower than expected; Industry competition intensifies; Price rise of raw materials; exchange-rate risks; Risk of lifting the ban, etc.
