\u3000\u3000 Semiconductor Manufacturing International Corporation(688981) (688981)
Event: 4q21 achieved a revenue of US $1.58 billion, with a year-on-year increase of 61% and a month on month increase of 11.6%, falling within the previous guidance range of 11-13%. Among them, the wafer sales business increased by 6% month on month, down from the 8% month on month growth of 3q21; Benefiting from the general price rise of the company’s products and the improvement of product structure, the company’s gross profit margin continued to grow to 35%, which was at the upper limit of the range of 33% – 35% previously guided; The net profit of the company was USD 530 million, with a year-on-year increase of 108%, mainly due to the income brought by investment in associates.
It is expected that 1q22 company’s performance will continue to grow rapidly and its profitability will be further improved: the prosperity of the wafer foundry industry is still in progress. The company signed a long-term contract with customers to lock in the price, guiding 1q22asp to increase by more than 10% month on month, and the revenue growth range is 15% – 17% month on month; The company’s gross profit margin is expected to further increase with the improvement of ASP and product structure. The company’s guideline 1q22 gross profit margin range is 36% – 38%, and the gross profit margin in 2022 is higher than 35% in 2021.
The company has accelerated capacity expansion, and the business continuity problem is basically controllable or drives the rapid growth of revenue: since 2h21, the license decentralization of the company’s mature process in the United States has gradually returned to normal, and the total capacity of 4q21 company’s 8-inch wafer has reached 621k / m. The prospect of the company’s production expansion is gradually clear, and the problem of business continuity may be basically solved. After fully considering the risk of equipment delivery delay and the risk of American license decentralization, the company guides the new capacity of about 8 inches in 2022 to 130 ~ 150k / m, which will exceed the new capacity of 100k / m in 2021. It is expected that the new capacity in 2022 will mainly come from the expansion of the current stock of 12 inch plants. The three new 12 inch plants in Shenzhen, Beijing and Shanghai Lingang Holdings Co.Ltd(600848) will significantly release capacity in 2023. However, the regulatory risk in the United States remains, and the process of license decentralization needs to be continuously tracked. Due to the abundant internal platforms of the company and the flexible distribution and adjustment of capacity among products, it can hedge the downside risk of prosperity in some downstream fields to a certain extent. We expect that in 2022, under the background of production expansion, the company’s capacity utilization is still expected to remain full load, and the revenue growth rate is expected to reach 30%, which is better than the industry’s level of 20% + (from the prediction of TSMC’s 4q21 performance meeting).
Profit forecast, valuation and rating: Based on the company’s production expansion progress exceeding expectations, the net profit forecast of Semiconductor Manufacturing International Corporation(688981) (0981. HK) for 22-23 years was raised by 46% / 38% to US $1.77/1.97 billion, corresponding to a year-on-year increase of 4% / 11%; Similarly, the net profit forecast of Semiconductor Manufacturing International Corporation(688981) (688981. SH) for 22-23 years was raised by 57% / 54% to RMB 12.4/13.6 billion. The company still has the potential risk of being controlled by the United States, but the decentralization of the supply chain license in the United States is relatively active. The current price of Hong Kong stock Semiconductor Manufacturing International Corporation(688981) corresponds to 1.1 times Pb in 22 years, which is at the bottom of the valuation (the company’s valuation has been 0.9-3.8 times Pb since 2020), maintains the “buy” rating of Hong Kong stock Semiconductor Manufacturing International Corporation(688981) (0981. HK), and maintains the target price of HK $31; A shares Semiconductor Manufacturing International Corporation(688981) have no obvious valuation advantage and maintain the “overweight” rating of A-Shares Semiconductor Manufacturing International Corporation(688981) (688981. SH).
Risk warning: the valuation of semiconductor sector fluctuates systematically; The United States has tightened its control policy.
