\u3000\u3000 Puya Semiconductor (Shanghai) Co.Ltd(688766) (688766)
Event: on February 22, the company issued the announcement of pre increase of 2021 annual performance; It is estimated that the operating revenue in 2021 will be 1.103 billion yuan, with a year-on-year increase of 53.75%. The net profit attributable to the parent company was 293 million yuan, a year-on-year increase of 239.96%. Non net profit deducted is expected to be 274 million yuan, with a year-on-year increase of 241.57%.
Comments: norflash + EEPROM opens the second growth curve in the high-capacity and reliable market. In the past three years, the company’s performance and net profit have continued to expand, and the advantages of product technical barriers have laid a market position for it. We are firmly optimistic about the growth momentum of the company driven by the high boom of memory chips and domestic alternative logic. The reasons for the company’s outstanding performance in 2021 include: 1) strong demand in the downstream terminal application market, the company vigorously promoted market expansion and achieved major breakthroughs in many downstream subdivided application fields such as the Internet of things and industrial control. The company’s market position in China has been further consolidated and improved, and its business performance has increased rapidly overseas. 2) Optimize the product customer structure, the company continuously optimizes the product and customer structure, and the comprehensive gross profit margin has been improved; 3) R & D investment is transformed into product technology advantages. The company continues to increase R & D investment and accumulate product and technology advantages. By actively promoting the upgrading of 40nm process and the iteration of original products, the mass production of new products enriches the product line and downstream applications, and improves the company’s product competitiveness and profitability;
The downstream consumer electronics + Internet of things market demand is booming, and the company is optimistic about the continuous high growth of revenue. The process and application scenarios of memory chips are constantly iterative and upgraded, and the requirements of downstream customers for chip performance are becoming more and more diverse. In particular, the rise of wearable devices and Internet of things devices has increased customers’ requirements for chip power consumption, area and other performance. Norflash of the company adopts 55nm and 40nm processes norflash, with a capacity of 512kb-128mb, which meets the needs of most terminal application markets. EEPROM products cover 2kbit to 1mbit capacity, and end customers include many mobile phone + home appliance manufacturers. The continuous expansion of the supply proportion of the company’s major customers also confirms the success of the Puya Semiconductor (Shanghai) Co.Ltd(688766) product strategy and the excellent competitiveness of its products. Under the background of the continuous prosperity of the market demand for consumer electronics and Internet of things terminal applications, we are optimistic that the substitution of similar products of the company can pry the stock market and drive the continuous and rapid growth of the company’s operating revenue in the future.
The optimization of product and customer structure increased the gross profit margin, and the net profit attributable to the parent company increased rapidly. The company continues to optimize the product and customer structure and improve the comprehensive gross profit margin. From 2018 to the first half of 2021, the company’s gross profit margin was 24.75%, 27.46%, 23.79% and 32.48% respectively. The company adopts a cost-effective strategy to enter the market, and the shipment growth is fast. The resulting scale effect makes the company’s profitability continue to improve. From 2018 to 2021, the company’s net profit attributable to the parent company was RMB 13 million, RMB 32 million, RMB 86 million and RMB 293 million respectively, with a year-on-year increase of 259.71%, 141.67%, 166.20% and 239.96% respectively. The company’s main products are continuously optimized, and the performance and specifications are continuously improved on the basis of product differentiated services. The company’s norflash products adopt SONOS basic process technology. Compared with the mainstream process technology etox, SONOS has great advantages in power consumption and production cost; The company’s EEPROM products have reached the level of international competitors in terms of reliability (including erasure times, storage time), working voltage and other key performance indicators. In the continuous research and development of consumer EEPROM products and vehicle EEPROM products, the terminal application scope of the products is expected to be further expanded.
Hold the advantage of small and medium capacity long board + enter the large capacity norflash market, optimistic about the dual technology route and open the second growth space. At present, the company promotes the research and development of medium and large capacity norflash from the two technical routes of SONOS and etox. Large capacity norflash market has the characteristics of strong customer stickiness and high gross profit margin, which is conducive to the company’s long-term sustainable development and brand accumulation. In the upgrading, R & D and industrialization project of NOR flash memory chip, the company takes its own strategic planning as the guidance and aims at the product market with high capacity and high reliability. Products under development include: 40nm norflash series memory chips; Newgennorflash series memory chips. Cutting into the automotive electronics market, 5g base station and other industrial markets and high-capacity Internet of things equipment market can improve the company’s norflash business development space. We are optimistic about the long-term and stable growth of the company’s business performance.
Investment suggestion: the company’s performance exceeds expectations and continues to be optimistic about the company’s growth potential. It is estimated that the net profit attributable to the parent company in 21-23 years will be 293 / 366 / 484 million yuan respectively; The corresponding EPS is 8.07/10.10/13.36 yuan / share, and the dynamic PE is 40.00/31.98/24.18 times respectively. Maintain the “buy” rating.
Risk warning: the performance pre increase data is only the preliminary accounting data, and the specific and accurate financial data are subject to the 2021 annual report data officially disclosed by the company, increased competitive pressure, expiration of SONOS process technology authorization, accounts receivable risk, supplier concentration risk, technology iteration risk of norflash and EEPROM products, and the risk of rising wafer and sealed test prices
