\u3000\u3 Guocheng Mining Co.Ltd(000688) 018 Espressif Systems (Shanghai) Co.Ltd(688018) )
Event: the company released the 2021 annual report and the 2022 restricted stock incentive plan (Draft). In 2021, the company achieved a revenue of 1.39 billion yuan in 2021, a year-on-year increase of 66.8%; The net profit attributable to the parent company was 200 million yuan, a year-on-year increase of 90.7%. In addition, the company plans to grant 1.6 million restricted shares to 212 incentive objects (accounting for 41% of the total number of the company), accounting for 2% of the total share capital of the company.
Q4’s revenue has reached a record high, and esp32 product line has been gradually improved. In the fourth quarter of 2021, the company’s operating revenue was 410 million yuan, a record high in the single quarter, with a year-on-year increase of 46.8%; The net profit attributable to the parent company was 50 million yuan, with a year-on-year increase of 116.4%. In terms of gross profit margin, the comprehensive gross profit margin in 2021 was about 39.6%, down 1.7pp from 2020, mainly due to the increase in the proportion of module sales. The decline in module gross profit margin was due to the expansion of storage capacity used in the module, resulting in the increase of cost. Only from the chip side, the gross profit margin of the company’s chip business in 2021 was 48.9%, an increase of 3.1 percentage points year-on-year, mainly due to the lack of core in the semiconductor industry in 2021, and the company adjusted the price downstream. At the same time, the launch of the company’s new products enriched the overall product matrix, thus realizing a more flexible product price adjustment. In 2021, the company released three chips, the first C6 supporting Wi Fi 6, H2 supporting thread and ZigBee, and C2 creating the best cost performance. Rainmaker cloud platform has also been commercialized. In 2021, the total sales volume of the company’s chips was 150 million. If the chips contained in the module are included, the total sales volume of the actual chips is about 230 million, and the total number of chips shipped has reached 700 million. The proportion of the top five customers decreased from 50.96% in 2019 to 29.05%, and the customer concentration continued to decline. At the same time, the EBV of the top five customers was added, accounting for about 3.8%.
With sufficient equity incentive, Wi Fi MCU is the leader to enter Wireless SoC. The company plans to grant 1.6 million restricted shares to 212 incentive objects, and the performance targets for 20222025 are not less than 15.5 (year-on-year + 11.5%), 17.6 (year-on-year + 13.7%), 20 (year-on-year + 13.4%) and 2.5 (year-on-year + 25%) billion yuan respectively. At the same time, based on AI MCU self-developed chip, Wi Fi 6 self-developed chip, quad core MCU self-developed chip and Wi Fi 6e self-developed chip, the cumulative sales from successful product development to the end of the assessment year shall not be less than 10 million yuan. We believe that the plan has wide coverage and sufficient incentives, and puts forward clear industrialization requirements for the company’s R & D projects. In addition, the company puts forward the core competitiveness of “four beams and four pillars”, which are respectively “four beams”: connection and chip design technology, platform system, software scheme, developer ecology, and “four pillars”: product development environment, tool software, cloud service and document support. We believe that based on connection and in-depth layout processing technology, the company further extends its products from Wi Fi MCU to Wireless SoC, and expands its downstream fields to industries, medical treatment, Internet of vehicles and other fields at the same time. It is expected to maintain high growth in the future.
Profit forecast and investment suggestions. It is estimated that the company’s EPS from 2022 to 2024 will be 3.51 yuan, 5.03 yuan and 6.71 yuan respectively, and the corresponding PE will be 45, 31 and 23 times respectively, maintaining the “buy” rating.
Risk tip: the risk of sharp price reduction due to intensified industry competition; Risk of sharp rise in the purchase price of raw materials; Risk of product R & D progress falling short of expectations.
