Sanan Optoelectronics Co.Ltd(600703) (600703)
Event: the company announced that in the first three quarters, Xiamen San’an integration achieved a revenue of 1.669 billion yuan, a year-on-year increase of 152.1%, a net profit of 396 million yuan, and a year-on-year turnaround. Quanzhou San’an semiconductor achieved a revenue of 1.412 billion yuan in the first three quarters, a year-on-year increase of 421.74%, and a net profit of 470 million yuan, a year-on-year increase of 495.08%.
Comments: the company’s IC business has entered the harvest period, and its profitability has improved significantly. In terms of profitability, the gross profit margin of Xiamen San’an integration was 36.22%, a year-on-year increase of 16.48pct, and the net profit margin was 28.20%, a year-on-year increase of 16.25pct. Quanzhou San’an semiconductor has a gross profit margin of 25.22% and a net profit margin of 28.05%. This shows that the company has made a breakthrough in product structure optimization, and the company’s key layout value in silicon carbide, RF and other integrated circuit fields has been fully demonstrated. In September this year, the company released the fourth employee stock ownership plan, which helps to motivate employees and help the company seize key opportunities. It also shows the company’s strong confidence in future development. This year, the company has significantly accelerated the pace of production expansion in the third generation of compound semiconductors and achieved multi-point breakthroughs in the downstream market. The company’s capacity layout and market development in the RF field are progressing smoothly, and has launched four tools with key value in the filter field, which marks that San’an integration has reached the forefront of the industry in the filter field, and the Growth Logic of the company in the future is clear.
There are many breakthroughs in the downstream market of silicon carbide. Changsha factory plans to produce 30000 pieces a month. In the first half of this year, the company opened 518 new customers in the field of silicon carbide diode business, more than 180 shipping customers, and more than 60 products have entered the mass production stage. It has achieved stable supply to benchmark customers in the subdivided application market such as server power supply, communication power supply, photovoltaic inverter, charging pile, vehicle charger and household appliances, With the help of technology and sales layout in Europe, America, Japan, South Korea and other countries and regions, strategic cooperation has been realized with international benchmark customers, and breakthroughs have been made in overseas markets. Two products of silicon carbide diodes have passed on-board certification and sent samples to industry benchmark customers, which are in the stage of small batch production. Silicon carbide MOSFET industrial grade products have been submitted to customers for verification, and vehicle specification grade products are cooperating with a number of vehicle enterprises to do streamer design and testing. In terms of silicon-based gallium nitride products, about 60 customers have completed engineering sample delivery and system verification, and 24 have entered mass production. San’an Changsha project was ignited in June and plans to produce 30000 6-inch silicon carbide wafers per month. The project is committed to the vertical integration of the whole industrial chain and realizes the comprehensive control from raw materials to device packaging. It will have more significant competitive advantages in product reliability, consistency and delivery time.
The RF business is progressing smoothly and a breakthrough in key filter products has been achieved. The company’s GaAs RF expansion equipment has been gradually put in place in the first half of the year, with a production capacity of 8000 pieces / month. The shipped products fully cover 2g-5g mobile phone PA, WiFi and other application fields. There are nearly 100 customers at home and abroad, and has become the main supplier of China’s leading RF design company. Filter saw and tc-saw products have developed 41 customers, of which 17 are the main customers of mobile phone and communication modules in China. The products have been successfully introduced into the supply chain of mobile phone module industry. In the first half of this year, the company launched a small-size Band1 + band3 Quad that can be mass produced to achieve high isolation between band1tx and band3rx, at the same time, it has reached the world-class low insertion loss value, and the temperature drift coefficient can reach – 20ppm / ℃ or lower. The release of the quad indicates that San’an integration has come to the forefront of the filter industry, and has become the first enterprise in China to provide a full set of quad and duplexer products required by phasevnr architecture.
Investment suggestion: the company is optimistic about the rapid growth of compound semiconductor business capacity and the future potential of RF business. It is believed that the company is expected to usher in rapid growth in the next three years. It is expected to realize the net profit attributable to the parent company of RMB 2.469 billion and RMB 3.253 billion in 21-22 years, and maintain the “buy” rating.
Risk tip: the new capacity climb is less than expected, the demand for silicon carbide is less than expected, and the demand for RF is less than expected
