\u3000\u3000 Will Semiconductor Co.Ltd.Shanghai(603501) (603501)
Key investment points
Event: the company released the performance forecast for 2021, and it is expected to realize the net profit attributable to the shareholders of the listed company of RMB 4.47-4.87 billion, with a year-on-year increase of 65.1% - 79.9%; The net profit after deducting non recurring profit and loss was RMB 3.92-4.27 billion, with a year-on-year increase of 74.5% - 90.1%. The company's performance increased rapidly year-on-year, which is in line with our expectations.
There is a strong demand for automobile and security. The company has deeply cultivated and integrated various product lines, and its profitability has been steadily improved. In 2021, the company's performance increased rapidly, mainly due to: 1) due to the growth of market demand for image sensors in automobile, security and other fields, and the increase of the company's market share in automobile and security, the company's image sensor solution business performance further improved significantly. 2) Due to the launch of the company's new tddi products and the further expansion of customers in the market, the company's touch and display solution business provides the company with a new profit growth point. 3) The company continued to optimize the market layout, integrate and deepen its main businesses, enhance synergy, and steadily improve the company's sustainable profitability.
The share of security CIS in major customers has increased, the on-board CIS has ushered in a broad market space, and the company's image sensor business has grown steadily under the condition of high market share. In 2021, in terms of security CIS, the company's share of key downstream security customers increased and made smooth progress overseas, so its performance increased significantly; In terms of automotive CIS, due to the production capacity difficulties of major international friends and the increase of market demand by about 30%, the company has successfully obtained a considerable incremental market with the help of its advantages and technology accumulation in the field of medium-level pixels of automotive CIS, and further improved its market share in the field of automotive CIS. In the next five years, with the popularization of new energy vehicles and the development of automatic driving technology, the agency predicts that the sales of on-board CIS will increase by more than 33% CAGR. As the main manufacturing and consumer market of smart cars, China is expected to grow faster than the world. Due to the domestic leading position of CIS, the continuous expansion of vehicle product line and the technical layout of higher pixels, the company is expected to further enjoy the double dividend brought by market expansion + market share increase.
The company deepened the layout of touch and display business, and tddi business contributed revenue. In 2021, the company deepened its layout in tddi and DDIC through acquisition and merger, and quickly realized mass production with deep R & D investment and extensive technology accumulation. At present, the company's business is mainly used in the smartphone maintenance market. With the increase of the proportion of smart phone lcdtddi scheme, the demand for tddi is expected to maintain stable growth. With the further introduction of key customers, the company's tddi business is expected to continue to contribute to revenue.
Profit forecast and investment suggestions. From 2021 to 2023, the operating revenue of the company is expected to be 28.79/35.99/43.64 billion yuan respectively, and the net profit attributable to the parent company is expected to be 4.53/59.5/7.7 billion yuan respectively. Considering the leading position of the company in the domestic CIS field, the strong downstream demand is expected to continue, and the further volume of touch and display business, the company is given a 46 times PE valuation in 2022, corresponding to the target price of 312.34 yuan, maintaining the "buy" rating.
Risk warning: the downstream demand is less than the expected risk; Customer development is less than expected risk.
