\u3000\u3 Shengda Resources Co.Ltd(000603) 986 Gigadevice Semiconductor (Beijing) Inc(603986) )
In recent January, the retail price of the company’s MCU representative products has been strong, and the overall price has been stable in recent weeks: from 2021 to 2022, the contribution to the company’s performance increment is mainly MCU business. We regularly focus on tracking the retail price change trend of 54 MCU products, in order to track the change of MCU business of the company. In addition, as the leader of 32-bit MCU in mainland China, the price change also reflects the overall prosperity of the industry. In the past month (2022 / 2 / 6-2022 / 3 / 6), the retail prices of M23, m3 and M4 series products were strong and basically did not fluctuate in the middle of the month, reflecting that the company’s MCU products and MCU industry still maintained a high outlook. By product: 1) M23 series: the whole series is positioned at the low end. Among the five product models tracked, the price has been strong in the past month and there is no fluctuation in the middle of the month. 2) M3 series: it is applied in high, middle and low end. Among the 25 product models tracked, the price of only one product has decreased in recent month. Among them, the prices of 5 high-end products are strong and have no fluctuation in the middle of the month, only 1 of the 9 middle-end products is reduced, and the prices of 11 low-end products are stable. 3) M4 series: it mainly focuses on medium and high-end products. The number of tracked models is 24. There are 21 high-end + middle-end models and only 3 low-end models. Among them, only 3 products are reduced in price and 1 model is significantly increased in price. Among the 9 high-end products, the price of only 2 decreased, the price of only 1 of the 12 middle-end products decreased, and the price of 1 of the 3 low-end models increased by more than 110%.. In the past week (2022 / 2 / 272022 / 3 / 6), there are 54 products of M23, m3 and M4 in total, of which the retail price of 2 models has increased, only 2 models have decreased, and the price is stable as a whole. By product: 1) M23 series: among the five low-end models tracked, the price has not fluctuated in the past week. 2) M3 series: the price of one of the 25 products is increased. Among them, the price of 5 high-end models + 9 terminal products is stable, and the price of 1 of the 11 low-end models is increased. 3) M4 series: there are 24 products, including 2 with price reduction and 1 with price increase. Among them, 2 of the 9 high-end products have reduced prices, 1 of the 12 middle-end products has increased prices, and the prices of the 3 low-end products are stable.
In recent January, NAND has passed the vehicle regulation certification, and nor and MCU are progressing smoothly. 1) Car regulation NAND: in February this year, gd5f’s full range of localization spinand passed the car regulation level certification, which is an effective expansion of the company’s nor products. According to IHS data, NAND accounts for more than 25% of automotive memory chips, with a market size of nearly US $1 billion. 2) Car gauge nor: at present, the company’s car gauge grade products cover 2mb-2gb capacity, realize the whole line, and have been adopted in batches in many automobile enterprises. Automobile is the third largest downstream application in the nor industry, accounting for more than 18% of the market share, second only to communication and consumer electronics. The car regulatory nor will continue to promote the growth of the company’s nor business. 3) Train gauge MCU: 2021q3, gd32a series of train gauge MCU products have passed the certification and are mainly oriented to the general body market, such as cockpit, etc. The product was successfully released at the end of last year and is now in the customer testing stage. It is expected to be mass produced in the middle of the year and generate revenue in the second half of the year. Automobile is the largest downstream application of MCU, accounting for 35% of the MCU market share. Seven overseas leaders account for 95% of the global market share. The self-sufficiency rate in the mainland is very low. The company’s products will effectively support some mainland demand and continue to contribute to the company’s growth power. For details, please refer to the report Gigadevice Semiconductor (Beijing) Inc(603986) : the whole series of spinand has passed aec-q100 vehicle regulation level certification and continues to be optimistic about the development of vehicle regulation business issued on February 28, 2022.
The chairman has reduced his holdings by 1.6%. The reduction plan was terminated ahead of schedule last week and will not be reduced within 12 months. On March 4, 2022, the company announced that Mr. Zhu Yiming terminated the reduction plan in advance. During the implementation period of the reduction plan, from December 3, 2021 to March 1, 2022, Mr. Zhu Yiming reduced a total of 10654600 shares through block trading, accounting for about 1.6% of the total share capital (it was expected that the reduction would not exceed 2% of the total share capital before the reduction). After the reduction, he held 6.86% of the shares, and the controlling shares and actual controllers will not change. According to the announcement issued by the company on January 29, 2022, Mr. Zhu Yiming promised that he would not reduce his holdings in the next 12 months.
We emphasize once again that the company, as a dual leader in the mainland storage + MCU industry, will continue to benefit from the dual logic of “localization” + “product structure optimization” in 2022. 1) Nor business, the third largest in the world and the leader in the mainland, continues to optimize the company’s product structure due to the distribution of storage capacity, application fields and processes. 2) MCU business, the 32-bit leader in the mainland, continues to benefit from the low self-sufficiency rate of the local market, and the upgrading of products to industry and automobile continues to bring structural optimization. 3) DRAM business has a very low self-sufficiency rate in the mainland, and self-research has developed rapidly. According to the announcement of purchasing and selling on behalf of DRAM company, it is estimated that it will be RMB 2.2 billion and RMB 1.8 billion in the year of purchasing and selling on behalf of DRAM; From January to November of 21, the actual amount of self-developed procurement and OEM was only 189 million, with a leap year-on-year growth. According to the calculation that wafer foundry accounts for 75% of the total manufacturing cost and 30% of the gross profit margin, the corresponding revenue is 1.6 billion yuan, and self research has developed rapidly. For details, please refer to the report Gigadevice Semiconductor (Beijing) Inc(603986) : the perfect ending of 2021, “localization + product structure optimization” is still the main logic of 2022 issued on January 24, 2022.
Investment suggestion: it is estimated that the net profit in 2021, 2022 and 2023 will be RMB 2.31 billion, RMB 3.22 billion and RMB 4.03 billion respectively, and the corresponding PE will be 43 / 31 / 25 times. Considering that the company is the double leader in the mainland storage + MCU industry, under the background of localization, the downstream demand is strong, the product structure continues to be optimized, and the scarcity and growth are both available, maintaining the “buy” rating.
Risk warning event: the prosperity of MCU and nor may be lower than expected, and the OEM cost increases. The company cannot bring the risk of pressure on gross profit margin through product structure adjustment or price increase.