\u3000\u3 Guocheng Mining Co.Ltd(000688) 018 Espressif Systems (Shanghai) Co.Ltd(688018) )
The downstream demand is highly prosperous and the performance continues to be excellent
On March 10, 2022, the company released its annual report for 2021, benefiting from the rapid expansion of the Internet of things industry. In 2021, the company’s operating revenue was 1.386 billion yuan, with a year-on-year increase of 66.77%. In 2021, the company’s net profit deducted from non attributable parent was 173 million yuan, with a year-on-year increase of 133.85%. Considering that IOT of intelligent terminal is still in the period of high-speed penetration and the recent stock price adjustment is large, we lowered the profit forecast for 20222023 and added the profit forecast for 2024. It is estimated that the net profit attributable to the parent company in 20222024 will be 300 / 444 / 660 million yuan (the original value in 20222023 will be 321 / 461 million yuan respectively) and EPS will be 3.74/5.54/8.23 yuan, The current share price corresponding to PE is 40.6 / 27.4 / 18.4 times, maintaining the “buy” rating.
The trend of modularization continues to advance, and the application terminal is developing to high-end
With the rapid increase of the penetration of Internet of things products, customers have higher requirements for the starting speed of new products, which makes the proportion of module shipments of the company continue to increase; From 2019 to 2021, the proportion of the company’s module shipments increased from 14.4% in 2019 to 35.7% in 2021. Further, the IOT of electronic terminals is developing from small household appliances with low value such as lamps and speakers to terminals with high value such as white electricity and security; In 2021, the memory chip capacity used by the company’s module products showed an expanding trend, which means that the company’s products are being used for terminals with higher storage capacity demand and higher value.
The product matrix has become richer and the ecological barriers have continued to rise
Although the core function of the company’s products is to realize the WiFi connection of electronic terminals, from 2014 to 2021, the company has launched eight series of WiFi MCU by balancing the characteristics of performance and cost, which enables users to select the most cost-effective WiFi MCU according to the subdivision needs of various applications. Unlike traditional chip design companies, which only focus on chip design, Espressif Systems (Shanghai) Co.Ltd(688018) in chip design, software development, cloud services and developer ecology, the company’s popularity has been enhanced and a unique technology ecology of products has been formed, which makes the company’s competition in WiFi MCU not only limited to cost fighting, but also has the sustainable advantage of ecology.
Risk warning: there is a risk of continuous tightening of upstream capacity; There is great uncertainty in the speed of customer expansion; There is uncertainty in the research and development progress of new products.
