\u3000\u3 Bohai Water Industry Co.Ltd(000605) 358 Hangzhou Lion Electronics Co.Ltd(605358) )
Performance summary: in 2021, the company achieved an operating revenue of 2.54 billion yuan, a substantial increase of 69.2% year-on-year; The net profit attributable to the parent company was 600 million yuan, with a year-on-year explosive growth of 197.2%.
Revenue and profit increased strongly, and R & D investment continued to increase. The whole year of 2021: 1) on the revenue side, the company achieved a revenue of 2.54 billion yuan, a significant year-on-year increase of 69.2%. 2) From the profit side, the company realized a net profit attributable to the parent company of 600 million yuan in the whole year, with a year-on-year increase of 197.2%. Among them, the company’s gross profit margin was 44.9%, up 9.6pp year-on-year; The net interest rate was 24.5%, with a sharp increase of 10.2pp. 3) On the expense side, the company’s sales expense ratio was 0.7%, a slight decrease of 0.1pp year-on-year; The rate of administrative expenses was 2.8%, a year-on-year decrease of 1.0pp; The R & D expense ratio was 9.0%, with a year-on-year increase of 1.5pp.
The downstream production is greatly expanded, and the localization and substitution of silicon wafers is expected to accelerate. From the perspective of semiconductor industry, driven by the demand of new energy and housing economy, the industry will maintain a high boom in 2021, the foundry capacity of wafers will continue to be in short supply, and manufacturers such as TSMC and Semiconductor Manufacturing International Corporation(688981) will greatly expand their production. There will be strong support for the certainty of silicon wafer demand in the next 2-3 years. In addition, due to the impact of Sino US trade friction, the localization and substitution of mainland semiconductor industry chain has accelerated. From the perspective of the planned capacity of mainland wafer factories, Semiconductor Manufacturing International Corporation(688981) 12 inch monthly capacity will be expanded by 240000 pieces, and Huahong semiconductor’s 12 inch monthly capacity will be expanded by 4 Tianma Microelectronics Co.Ltd(000050) 000 pieces. With the promotion of new capacity construction, the localization of large silicon wafers is expected to speed up.
It plans to acquire Guojing semiconductor and improve the layout of 12 inch light doped chips Hangzhou Lion Electronics Co.Ltd(605358) will spend 1.49 billion yuan to control Guojing semiconductor, holding 78% directly or indirectly. Guojing semiconductor mainly distributes 12 inch light doped silicon wafers. At present, it has completed the production capacity construction of 400000 light doped silicon wafers. The products are in the verification stage of downstream customers and have not realized revenue Hangzhou Lion Electronics Co.Ltd(605358) the current round of acquisition will improve the company’s business layout in the field of light mixed chips + heavy mixed chips, and realize the business foundation of expanding to logic and storage customers.
Layout of RF front-end field, with sufficient growth momentum in the future. Mainland China occupies a certain share in modules such as LNA and 4GPa, but the localization rate of front-end modules such as 5gpa and filter is low Hangzhou Lion Electronics Co.Ltd(605358) through the layout of RF processing business in Haining factory, the product layout of gallium arsenide, silicon carbide based gallium nitride and VCSEL will be formed, which is expected to lead China to achieve technological breakthroughs in RF field. At present, the company’s RF chip business is in its infancy. With the technological breakthrough and capacity release, it is expected to continue to provide growth momentum for the company in the medium and long term.
Profit forecast and investment suggestions. We raised the company’s EPS from 2022 to 2024 to 2.06 yuan, 2.77 yuan and 3.58 yuan. The compound growth rate of net profit attributable to the parent company is expected to reach more than 35% in the next three years. We continue to be optimistic about the company’s leading edge in 12 inch heavily doped epitaxial wafers and maintain the “buy” rating.
Risk tip: capacity construction is less than expected; Oversupply in silicon wafer industry; The R & D of RF business is less than expected.
