Sg Micro Corp(300661) (300661)
Investment logic
Automotive, industrial and 5g communication drive the continuous growth of global analog IC. 1) the promotion of the demand for analog chips by electric vehicle + self driving is mainly reflected in the incremental demand for power management IC, DAC, amplifier and other kinds of sensors such as BMS (power management system), intelligent cockpit, automatic driving system, and so on. 2) industrial automation upgrading pushes software configurable system, cloud connection, machine health monitoring and management, system security and Siasun Robot&Automation Co.Ltd(300024) The demand for analog chips in five application fields; 3) The 5g base station increases the demand for power management IC, and the scale of aiot device driver, speaker driver, backlight, OLED driver, power chip, RF device, motor driver chip and other related analog chips continues to grow. It is estimated that the global analog chip market will reach US $80 billion in 2023, and the CAGR will be 12.85% in 20-23 years.
Domestic substitution brings development opportunities for Chinese simulation manufacturers. It is estimated that the scale of China's simulation market will reach US $28.7 billion in 21 years, but the localization rate is less than 15%. With the encouragement of policies and the shortage of global chip production capacity, Sg Micro Corp(300661) and other Chinese analog IC manufacturers have ushered in domestic substitution opportunities.
Three core advantages of the holy state. 1. Double main industries go hand in hand, continuously expand categories and optimize product structure: accelerate the layout of power management IC and signal chain IC, continuously add 400-500 new products every year, and the total proportion of high gross margin products such as industrial control, medical treatment and automotive electronics has increased from 30% in 2019 to 40% in 2021h1. 2. Distribution oriented, Continue to develop new customers (more than 3000 end customers) and reduce the dependence on single customers (the revenue proportion of the top five customers decreased from 54% in 2017 to 45% in 2020). 3. Continue to invest heavily in internal R & D + external M & A: the proportion of core technicians increased from 65% in 2016 to 73% in 2020, and the R & D expenditure accounted for 17% in 2020, which exceeded the average value of overseas large analog manufacturers by 3 percentage points; follow the successful path of Ti externally, continue to conduct revenue M & A, broaden product lines and accelerate resource integration To consolidate the market position.
Investment advice
In view of the continuous growth of analog chip industry driven by automobile, industry, 5g base station and aiot equipment, and the low localization rate in the Chinese market, the company, as the leader of analog chips in China, will fully benefit from the opportunity of domestic substitution with the gradual expansion of product categories. We estimate that the company's revenue from 2021 to 2023 will be RMB 2.120/32.12/4.663 billion, and the net profit attributable to the parent company will be RMB 6.15/8.30/1.112 billion. Referring to the unanimous expectation of wind, we will use the PE valuation method to give the company 110 times PE in 2022, the target market value will be RMB 91.35 billion, the corresponding target price will be RMB 387.07, and give the "overweight" rating for the first coverage.
risk
Downstream demand is lower than expected; Industry competition intensifies; Price rise of raw materials; exchange-rate risks; Risk of lifting the ban, etc.
