\u3000\u3 Guocheng Mining Co.Ltd(000688) 981 Semiconductor Manufacturing International Corporation(688981) )
Conclusions and suggestions:
The company announced its operations in the first two months of 2022. The revenue side increased by nearly 60% year-on-year, and the net profit increased by more than 90% year-on-year, reflecting the strong demand for wafer foundry and the continuous expansion and full production of its own capacity. It is expected that 1q22 company’s revenue and net profit will maintain a high-speed growth trend. At present, the company’s H-share price corresponds to 8 times of PE and 1 times of PB1 in 2023. The valuation is low, so buy suggestions are given. A shares in 2023 pe28 times, giving buy advice.
The growth of revenue and net profit in the first two months of 2022 exceeded expectations: the company announced that the company realized an operating revenue of about $1.223 billion in the first two months of 2022, a year-on-year increase of 59.1%; The net profit was about US $309 million, a year-on-year increase of 94.9%. The company’s operating performance increased significantly and was better than expected, laying a solid foundation for the significant growth of 1q22 performance. We believe that the substantial year-on-year growth of the company’s performance is due to the continuous high operation of the industry boom, the year-on-year increase of OEM costs, and the company’s gross profit margin increased from 22% of 1q21 to more than 36%; On the other hand, the company’s production capacity rose from 540000 pieces / month in 1q21 to 620000 pieces / month in 4q21, an increase of more than 15%.
The wafer foundry boom continues and remains optimistic in 2022: the mainstream OEM enterprises are in full load, and the supply of PMIC and vehicle mounted chips is still in short supply. At the same time, it is expected that the overall expansion of the capacity of the foundry in 2022 is limited and most of them have been locked. Therefore, it is expected that the tight supply and demand situation will continue in 2022. As the leader of China’s wafer foundry, the company’s tight chip supply is objectively conducive to the company’s stable customer relationship, and its revenue and profitability are expected to continue to improve.
Profit forecast: it is estimated that the company will realize net profit of USD 2.04 billion and USD 2.27 billion in 2022 and 2023, with a year-on-year increase of 20% and 11% respectively, and EPS of USD 0.26 and USD 0.29 respectively. At present, the share price of H shares corresponds to 9 times and 8 times of PE from 2022 to 2023, respectively. The valuation is low, so it is rated as “buy” and 28 times of PE for A-Shares in 2023.
Risk tip: the United States increased sanctions and lost customers.
