\u3000\u3000 Montage Technology Co.Ltd(688008) (688008)
Event:
The company issued the announcement of 2021 annual performance express on February 9, 2022: in 2021, the company realized an operating revenue of 2.562 billion yuan, an increase of 40.49% over the previous year; In 2021, the company realized a net profit attributable to the owner of the parent company of 829 million yuan, a decrease of 24.88% over the previous year.
Comments:
21q4 revenue, net profit and deduction of non net profit achieved rapid growth on a month on month basis. With the formal mass production and shipment of ddr5 memory interface chips and memory module supporting chips of the company, and the continuous development of Jinchuan CPU business, the performance of the company increased significantly in the fourth quarter of 2021. (1) In the fourth quarter of 2021, the company realized an operating revenue of 969 million yuan, an increase of 11.64% month on month and 172.88% year-on-year. Among them, the interconnection chip product line achieved an operating revenue of 601 million yuan in the fourth quarter of 2021, with a month on month increase of 39.97%, a year-on-year increase of 76.55% and a gross profit margin of 69.21%. (2) In the fourth quarter of 2021, the company achieved a net profit of 317 million yuan, an increase of 54.78% month on month and 40.18% year-on-year; In the fourth quarter of 2021, the net profit excluding non recurring profits and losses was 257 million yuan, with a month on month increase of 40.32% and a year-on-year increase of 236.67%.
In 2021, the company realized an operating revenue of 2.562 billion yuan, an increase of 40.49% over the previous year. The company’s operating revenue mainly comes from the interconnection chip product line (currently including memory interface chip and memory module supporting chip, PCIe retimer chip, etc.) and Jinchuan ® Server platform product line (including Jinchuan) ® CPU and hybrid secure memory module). (1) Jin catch ® In terms of server platform product line, after early market promotion and customer cultivation, Jinchuan CPU business has made a breakthrough ® The server platform product line achieved an operating revenue of 845 million yuan in 2021, an increase of 2750.92% over the previous year, and the gross profit margin was 10.22%; (2) The interconnection chip product line achieved an operating revenue of RMB 1.717 billion in 2021, a decrease of 4.31% compared with the previous year, and the gross profit margin was 66.72%.
In 2021, the company realized a net profit attributable to the owners of the parent company of 829 million yuan, a decrease of 24.88% over the previous year; The net profit attributable to the owners of the parent company after deducting non recurring profits and losses was 617 million yuan, a decrease of 18.73% over the previous year. The main reasons for the decline in net profit include the following aspects: (1) in 2021, the company’s main profit source DDR4 memory interface chip entered the late stage of the product life cycle, and the product price decreased compared with the previous year. At the same time, ddr5 related products were officially mass produced and shipped in the fourth quarter of 2021, As a result, the gross profit margin of interconnection chip product line decreased from 73.22% in the previous year to 66.72% in 2021; (2) In 2021, the sum of the company’s fair value change income and investment income from investment decreased by 84 million yuan compared with the previous year; (3) The R & D investment of the company increased by 7.3 billion yuan over the previous year, an increase of 23.3% over the previous year.
In 2021, the company’s share based payment expense was 177 million yuan, which was included in the recurring profit and loss, and the impact on the net profit attributable to the owner of the parent company was 132 million yuan (the impact of relevant income tax expenses has been considered). Therefore, the net profit attributable to the owners of the parent company after excluding the impact of share based payment expenses in 2021 was 961 million yuan, a decrease of 25.78% over the previous year; In 2021, excluding the impact of share based payment expenses, the net profit attributable to the owner of the parent company after deducting non recurring profits and losses was 749 million yuan, a decrease of 21.20% over the previous year.
Montage Technology Co.Ltd(688008) is the world’s first subdivision track and one of the few enterprises with global competitiveness in China. It is an international leading data processing and interconnection chip design company. It is committed to becoming a platform enterprise in the fields of computing, storage and interconnection in the field of server and data center. Montage Technology Co.Ltd(688008) is the world’s largest memory interface chip supplier, with a global market share of 45% in 2020. The company has a full range of memory interface chip products from DDR2 to DDR4, and has obtained strategic shares from Intel and Samsung.
1. Storage: ddr5 has far more market space than DDR4. As the king of DDR4 with a market share of nearly 50%, ddr5 is expected to benefit deeply. Memory technology has developed to ddr5 generation. Compared with DDR4 memory module, ddr5 needs to be equipped with other special supporting chips in addition to memory particles and memory interface chips. Montage Technology Co.Ltd(688008) not only introduced the first generation memory interface chip RCD / DB of ddr5, but also introduced three supporting chips of ddr5 PMIC, TS and SPD hub for the first time.
2. Interconnection: PCIe retimer chip will contribute important increment. At present, PCIe is the mainstream solution of server bus. Doubling the data transmission speed brings prominent problems of signal attenuation and reference clock timing reorganization. Therefore, PCIe retimer chip will have a huge application space. The PCIe 4.0 retimer chip developed by the company has achieved successful mass production, and can be applied to typical application scenarios such as nvme SSD, AI server and riser card.
3. Calculation: the CPU space of Tianjin capture platform is huge, the CPU of Tianjin capture platform starts rapidly, and the profitability will exceed the market expectation. Jinchuan CPU is a series of x86 architecture processors with pre detection and dynamic security monitoring functions launched by the company, which is suitable for Jinchuan or other general server platforms. Montage Technology Co.Ltd(688008) officially launched the third generation of Jinchuan CPU products with higher performance in April 2021. In April 2021, LanChi’s third-generation Jinchuan CPU was mass produced and put on the market. Jinchuan products received positive response from many domestic server manufacturers. For example, Xinhua III, Lenovo, Baode and great wall have launched server products supporting Jinchuan CPU. Jinchuan platform has been applied to government affairs, transportation, finance, energy and other fields with high requirements for hardware security. According to the company’s announcement, the company’s related party transaction volume between Jinchuan server platform and Intel in 2021 will not exceed 100 million yuan, 500 million yuan and 1.5 billion yuan, and will be increased to 1.584 billion yuan. In addition, the company expects the transaction volume of 2.5 billion yuan in 2022, indicating the company’s confidence in the future development of this business.
Market concerns are not a concern. Some investors are worried that the production of sapphire rapids chips using the new manufacturing process will be delayed. Pat Gelsinger, CEO of Intel, recently said that the company’s new generation of server chip sapphire rapids will start shipping in the first quarter of 2022 and increase production in the second quarter. The delivery time is in line with our expectations, and the market is not worried.
Repo and senior executives’ overweight demonstrated confidence. (1) The increase of senior executives’ holdings shows confidence: the chairman and CEO and the director and general manager increase their holdings by about 20 million yuan. (2) Montage Technology Co.Ltd(688008) announced in October 2021 that the company plans to repurchase the company’s shares with its own funds of 300-600 million yuan, and the repurchase price shall not exceed 86 yuan / share. As of January 31, 2022, the company has repurchased 3873000 shares of the company through the trading system of Shanghai stock exchange through centralized bidding, accounting for 0.34% of the company’s total share capital of 1132824111 shares. The highest price of repurchase transaction is 84.99 yuan / share and the lowest price is 72.56 yuan / share, The total amount of funds paid is 300020229.56 yuan (excluding stamp duty, transaction commission and other transaction expenses).
Profit forecast, valuation and rating: actively grasp the bottom platform leader, and have clear short, medium and long-term product logic. Montage Technology Co.Ltd(688008) is the world’s first subdivision track and one of the few enterprises with global competitiveness in China. It is an international leading data processing and interconnection chip design company. It is committed to becoming a platform enterprise in the fields of computing, storage and interconnection in the field of server and data center. In the future, the company’s memory interface chip business is expected to deeply benefit from the large volume of ddr5 memory interface chips and supporting chips; At the same time, we are optimistic about the domestic alternative space of the company’s Tianjin capture server platform and the large volume of PCIe retimer chips. According to the performance express, taking into account the increase of the company’s market share of capture servers and the technical barriers of memory interface chips in the future, the net profit attributable to the parent company of our Shangxiu company in 21-23 years is predicted to be 829 million yuan (+ 3.24%), 1.507 billion yuan (+ 22.32%), 2.151 billion yuan (+ 21.18%), Montage Technology Co.Ltd(688008) the current market value of 77.2 billion yuan corresponds to 93x, 51x and 36x PE in 21-23 years, respectively. We maintain the “buy” rating.
Risk tip: ddr5 progress is less than expected, and technology research and development is less than expected.
