\u3000\u3000 China Resources Microelectronics Limited(688396) (688396)
Event:
Recently, the company released the performance forecast for 2021. It is estimated that the net profit attributable to the parent company will be RMB 2.209 billion to RMB 2.233 billion in 2021, with a year-on-year increase of 129% – 132%. It is expected to deduct non net profit of RMB 2.040 billion to RMB 2.065 billion in 2021, with a year-on-year increase of 139% – 142%.
Key investment points:
Q4 performance meets expectations and the annual capacity utilization rate is high: according to the calculation of the company’s performance forecast, the net profit attributable to the parent company in Q4 in a single quarter is 520-550 million yuan, with a year-on-year increase of 89.5% – 98.2% and a month-on-month decrease of 15.6% – 10.7%; In Q4, the net profit attributable to the parent company after non deduction in a single quarter was 490-510 million yuan, with a year-on-year increase of 92.8% – 102.4% and a month on month decrease of 9% – 5.4%. In 2021, the company gave full play to the advantages of IDM mode, strengthened product business, improved the company’s core technology R & D capability, and continued to consolidate China’s leading position in the field of power semiconductors. The orders received by the company are relatively full, the overall capacity utilization rate is high, the overall performance is significantly better than that in the same period last year, and the operating revenue and gross profit margin have increased year-on-year.
The foundry of wafers continues to boom, and the growth rate of power semiconductors is considerable in the future: in 2021, due to the tight production capacity of wafer manufacturing and packaging testing, the demand growth of overall semiconductors was higher than expected, which greatly boosted the manufacturing and service business segment of the company (H1 achieved a revenue of 2.383 billion yuan, a year-on-year increase of 42%). It is expected that the company’s production capacity will climb further this year, and the existing 8-inch production capacity will be expanded in an orderly manner. The newly-built 12 inch wafer production capacity is expected to be released in the second half of this year, and the monthly production capacity is planned to be 30000 pieces after it is fully put into operation. At the same time, with the gradual industrialization of a new round of technologies such as 5g, industrial Internet, new energy vehicles and AR / VR, China’s power semiconductor industry is expected to usher in a golden period of import substitution and growth. According to omdia data, the global power semiconductor market will grow to US $44.1 billion in 2021 and exceed US $50 billion in 2024, with a compound growth rate of 4.3%; China’s power semiconductor market will reach US $15.9 billion in 2021 and is expected to reach US $19 billion by 2024, with a compound growth rate of 6.1%, faster than that of the world. The domestic substitution process of China’s power semiconductors is still in the preliminary stage. As the leader of domestic power semiconductors, the company will benefit deeply.
Domestic MOSFET suppliers are leading, and the layout of the third generation semiconductor is smooth: MOSFET and IGBT are widely used in the manufacturing of new energy vehicles, computers, mobile power supplies and so on because of their technical advantages. In recent years, the market scale and its proportion have been rising. The company is the absolute leader of domestic MOSFET and one of the few enterprises in China that can provide a full range of low, medium and high voltage MOSFET products in the range of – 100V to 1500V. In 2020, the company ranked third in China’s MOSFET market, second only to Infineon and Ansenmei. In 2021, the sales revenue of MOSFET products of H1 power device business group increased by 43% year-on-year. At the same time, in terms of IGBT, the company has continuously promoted the upgrading of IGBT application field, made breakthroughs in industrial and automotive electronics, and also launched IGBT module products. The IGBT business is expected to increase by 70% year-on-year in 2021, and there is still expected to be significant growth in 2022. In addition, the company has actively deployed in the third generation semiconductor field. In 2021, the company has achieved a breakthrough in the sales of SiC diodes and will soon launch sicmos products. In terms of Gan, the company has carried out research and development of silicon-based gallium nitride products on six inch and eight inch platforms at the same time, and has achieved sampling. On December 17, 2021, the company announced the launch of a new 1200vsicmosfet independently developed by the company, which represents another breakthrough in the field of compound semiconductors.
Issue the equity incentive plan to show the company’s confidence in long-term development: on December 25, 2021, the company issued the 2021 restricted stock incentive plan (Draft), which plans to issue no more than 15.07 million shares, accounting for 1.14% of the company’s total share capital, of which the first grant amount accounts for 80%, the reserved amount accounts for 20%, and the first grant price is 34.10 yuan / share. The performance assessment requires that the compound growth rate of the net profit attributable to the parent company from 2022 to 2024 compared with the average net profit attributable to the parent company from 2018 to 2020 shall not be less than 25%, 26% and 27% respectively, and shall not be lower than the 50th percentile of the benchmarking enterprise or the industry average. Through clear performance evaluation indicators and equity incentive scheme, it is conducive to deeply bind core technology and management talents, and help the long-term and stable development of the company.
Profitability continues to improve and cash flow is good: thanks to the improvement of the company’s capacity utilization and sales price, the company’s gross profit margin and net profit margin have continued to improve in recent three years, and the gross profit margin has increased from 22.84% in 2019 to 35.42% in 2021q1-q3; The net interest rate increased from 8.92% to 24.18%. The cash flow of the company is in good condition. The cash to cash ratio of q1-q3 in 2021 is 95.5%, an increase of 11.88 percentage points over the same period in 2020.
For the first time, give the company a “buy” investment rating: it is estimated that the net profit attributable to the parent company from 2021 to 2023 will be 2.21 billion yuan, 2.78 billion yuan and 3.23 billion yuan respectively, with corresponding growth rates of 129.5%, 25.9% and 16.0% respectively, and corresponding PE of 33.58x, 26.68x and 23x respectively. Considering the leading position of the company in the field of power semiconductors and good order visibility, with the further ramp up of production capacity in 2022, it is expected to fully benefit from the localization and substitution of power semiconductors. The current valuation of the company is cost-effective in both horizontal and vertical comparison, and the “buy in” investment rating is given for the first time.
Risk tip: the prosperity of semiconductors has fallen; Downstream demand is lower than expected; The company’s technology research and development is less than expected; Sino US trade frictions exacerbate the risk.
