\u3000\u3000 Verisilicon Microelectronics (Shanghai) Co.Ltd(688521) (688521)
On February 21, Verisilicon Microelectronics (Shanghai) Co.Ltd(688521) released the performance express for 2021. The company expects to achieve a revenue of 2.139 billion yuan in 2021, a significant year-on-year increase of 42.04%; The net profit attributable to the parent company was 14.19 million yuan, turning losses into profits; The net profit loss after deduction was 45.93 million yuan, and the loss after deduction narrowed by 60.66 million yuan year-on-year, with a narrow range of 56.91%.
The performance grew rapidly and achieved profitability for three consecutive quarters. In Q4 of 2021, the company achieved a revenue of about 618 million yuan, a year-on-year increase of 38.79%; The net profit attributable to the parent company was 36.01 million yuan, an increase of 51.1% month on month, making profits for three consecutive quarters.
In 2021, the IP authorization business grew steadily, and the scale effect of chip customization business appeared. The company’s main businesses are semiconductor IP licensing service business (including intellectual property licensing fee income and royalty income), one-stop chip customization service business (including chip design business income and mass production business income). Each business has achieved rapid growth in 2021:
(1) in 21 years, the company’s semiconductor IP authorization service business achieved steady growth, with annual revenue of about 707 million yuan, a year-on-year increase of 20.81%. As the company continues to launch new processor IP and expand the scope of IP authorization, the company’s displayprocessorip, serdesip and artificial intelligence IP begin to contribute revenue, and the IP authorization business is expected to maintain a steady growth trend.
(2) the proportion of high-end processes continued to increase, and the revenue of chip design business increased rapidly. In the 21st year, the company’s chip design business revenue was about 548 million yuan, with a rapid year-on-year growth of 104.48%, mainly benefiting from the continuous increase in the proportion of the company’s advanced process node revenue. In the first three quarters of 2021, the company’s chip design business process node revenue of 14nm and below accounted for more than 70%, and the process node revenue of 7Nm and below accounted for nearly 50%. In addition, the company has started the design and R & D of 5nm FinFET chip and the design pre research of the new generation fd-soi process node chip. The revenue proportion of high-level process projects has continued to increase, promoting the rapid growth of the revenue of chip design business.
(3) the scale effect of mass production business has appeared, driving the continuous improvement of the company’s profitability. In 21 years, the company’s revenue from mass production business was about 885 million yuan, a year-on-year increase of 35.40%. Over the past 21 years, the company has increased cooperation with wafer factories to realize the continuous growth of the number of mass production and shipment chips of revenue. The order to shipment ratio of mass production business has always maintained a high level, and the company still has many mass production projects to be produced. After the formation of revenue, it can inject strong momentum into the growth of the company.
Increasing R & D investment helps the company’s long-term growth. In 21 years, the company invested 689 million yuan in R & D, including 627 million yuan in R & D expenses, with a year-on-year increase of 18.08%. R & D investment accounted for 32.20% of revenue, which decreased by 9 percentage points year-on-year driven by the scale effect of high growth of revenue. In the future, with the further strengthening of the company’s scale effect, the R & D expense rate is expected to further decline, driving the continuous improvement of the company’s profitability.
Investment suggestion: we expect that the net profit attributable to the parent company in 21 / 22 / 23 is expected to reach 14 / 151 / 303 million yuan, the corresponding EPS is 0.03/0.31/0.61 yuan respectively, and the corresponding PE in 22 / 23 is 194 / 97 times respectively. The company is a world-famous one-stop chip customization service and semiconductor IP licensing service enterprise, which has strong scarcity, strong synergy of business model, and scale effect has appeared. It has been covered for the first time and is rated as “recommended”.
Risk warning: downstream demand is less than expected; Upstream capacity supply is limited; Market competition intensifies.
