\u3000\u3 Guocheng Mining Co.Ltd(000688) 018 Espressif Systems (Shanghai) Co.Ltd(688018) )
Event: the company released its annual report for 2021 on March 11. In 2021, the company achieved a revenue of 1.386 billion yuan, a year-on-year increase of 66.77%; The net profit attributable to the parent company was 198 million yuan, a year-on-year increase of 90.7%; The net profit attributable to the parent company after non deduction was 173 million yuan, a year-on-year increase of 133.85%. Corresponding to the single quarter of 21q4, the company achieved a revenue of 408 million yuan (YoY + 46.8%, QoQ + 17.53%) and a net profit attributable to the parent company of 50 million yuan (YoY + 116.37%, QoQ + 7.74%). At the same time, the company issued the restricted stock incentive plan (Draft) for 2022, which plans to grant 1 Shanghai Emperor Of Cleaning Hi-Tech Co.Ltd(603200) restricted shares to the incentive object at the price of 120 yuan / share.
The annual revenue increased significantly, and the gross profit margin fluctuated due to the shortage of production capacity and the change of product structure. Since the second half of 2020, with the control of the epidemic, the market has gradually returned to normal, the prosperity of the Internet of things industry has continued to improve, and the company’s annual product sales and revenue have increased significantly year-on-year in 2021. On the gross profit margin side, the company’s comprehensive gross profit margin was 39.6% in 2021, down 1.69pcts year-on-year, mainly due to the increase in the proportion of module shipments (from 22.8% in 2020 to 35.7%) and the low gross profit margin of modules. In terms of products, the gross profit margin of chips in 2021 was 48.94%, an increase of 3.24pcts year-on-year, which was mainly due to the company’s certain increase in chip prices under the circumstances of shortage of upstream wafer manufacturing and packaging testing capacity and rising costs; The gross profit margin of the module was 33.48%, down 2.52 PCTs year-on-year, mainly due to the shortage of upstream production capacity of the industry, the expansion of the storage chip capacity used by the module products, and the increase of the procurement cost of module supporting materials.
Software and hardware R & D, two wheel drive, “four beams and four columns” to build the road of Internet of things platform Espressif Systems (Shanghai) Co.Ltd(688018) adhere to the research and development of software and hardware, two wheel drive, and the product is oriented towards “processing + connection”, “Four beams and four pillars” build the company’s Internet of things Ecology (“four beams” include connection technology and chip design capability, platform system support capability, a large number of software application schemes and prosperous ecology; “four pillars” refer to product development environment, tool software, cloud services and rich and detailed document support). In 2021, the company released esp32-c6, esp32-c2 and esp32-h2 chips, covering AI, risc-v MCU, Wi Fi 6, Bluetooth Le, thread / ZigBee and other chip design technologies. The product boundary has also expanded from Wi Fi MCU to Wireless SoC. In addition, the company’s cloud product ESP Rainmaker R & D achievements have also been commercialized, evolving from the initial cloud middleware to a complete aiot platform to realize the one-stop product service strategy of hardware, software and cloud.
Attach importance to R & D investment and launch a new round of equity incentive. The company attaches importance to R & D investment. In 2021, the R & D cost was 272 million yuan, with a year-on-year increase of 40.92%, accounting for 19.6% of the revenue. At the end of the period, the number of R & D personnel reached 388, accounting for 75% of the total number of the company. At the same time, the company issued the restricted stock incentive plan for 2022, which plans to grant 1 Shanghai Emperor Of Cleaning Hi-Tech Co.Ltd(603200) restricted shares to the incentive objects at the price of 120 yuan / share, including 1338200 shares for the first time, with a total number of 212 people, mainly the company’s core technicians, accounting for 41.01% of the company’s total employees.
Investment suggestion: it is estimated that the net profit attributable to the parent company in 2022, 23 and 24 will be RMB 290, 392 and 514 million respectively, and the corresponding current price PE will be 43, 32 and 24 times respectively. The company is a global leader in the field of Internet of things Wi Fi MCU. With the gradual improvement of product matrix and technology, the Internet of things platform company can maintain the “recommended” rating.
Risk warning: the risk of downstream market fluctuation; The risk of intensified market competition; The risk that R & D progress is less than expected; Risk of rising raw materials.
