\u3000\u3 Shengda Resources Co.Ltd(000603) 986 Gigadevice Semiconductor (Beijing) Inc(603986) )
Events
Gigadevice Semiconductor (Beijing) Inc(603986) released the operating data from January to February 2022: from January to February 2022, the company achieved a total operating revenue of about 1.354 billion yuan, a year-on-year increase of about 49.22%.
Key investment points: the operating data from January to February are gratifying, and a good start will be achieved in 2022. Since 2022, the company’s memory, MCU and other products have continued to be in short supply, and the related business has maintained rapid growth. On the basis of continuously deepening the existing market and customers, the company continues to explore new markets, actively develop new customers, and strive to improve the performance contribution in industries and other fields. At the same time, in terms of supply chain management, the company made efficient use of production capacity resources and alleviated the pressure of structural supply, so as to achieve a significant increase in performance since the beginning of 2022. According to the preliminary accounting of the company, from January to February 2022, the company achieved a total operating revenue of about 1.354 billion yuan, with a year-on-year increase of about 49.22%, and achieved a good start in 2022.
Determined to move forward, the three business highlights will help the company grow in 2022
1) flash service:
The company’s NOR flash market share ranks third in the world, China is an absolute leader, and its technical capacity is leading in the industry. The demand for products related to the Internet of things, TWS Bluetooth headset, AMOLED, tddi and other mobile phone screens drives the growth of norflash market. According to the data of cinno research, the market scale is expected to grow to $3.7 billion in 2022. The automotive sector will become an important growth point in the future storage market. According to IHS data, the global automotive storage IC market will be US $3.6 billion in 2019 and is expected to grow to US $8.3 billion by 2025. The 2G high-capacity products of GD55 of the company have passed the aecq-100 certification of vehicle specification, the 2mb-2gb capacity of SPI nor flash vehicle specification products has been fully paved, and the whole series of gd25 vehicle specification storage products have been adopted in batches in many automobile enterprises. In February 2022, the company announced that its 38nmspi NAND flash-gd5f series (covering 1gb-4gb capacity) produced nationwide had passed aecq100 vehicle specification certification. So far, in the field of flash memory, the company has realized the comprehensive layout of vehicle specification products from SPI nor flash to SPI NAND flash.
2) DRAM service:
The company’s niche DRAM is a leader in China. In June 2021, it mass produced the first self owned brand of 19nm 4GB DDR4 product for niche market, which has passed the certification of many mainstream platforms in the field of consumer applications. At present, 17nm DDR3 products are under active research and development, and there is strong demand in downstream IPTV, security, automotive applications and other markets. According to trendforce data, It is estimated that the global niche DRAM market will reach US $18.465 billion in 2023. At the same time, the company cooperates closely with Changxin storage to provide stable production capacity guarantee for the company’s DRAM products. In the future, DRAM products will become a new revenue contribution point of the company.
3) MCU service:
As a leading manufacturer of 32bitmcu in China’s MCU category “supermarket”, the company has successfully mass produced 28 general MCU series, which can provide rich functions and capacity options such as entry-level, mainstream and high performance. The company’s MCU products are steadily entering the vehicle specification market. At present, the first vehicle specification MCU product has been released, and it is expected to achieve mass production in 2022. In the process of automobile intellectualization, MCU will play a relatively important role with a wide range of applications, ranging from vehicle body control, instrument panel, on-board information and entertainment system (IVI), communication system, advanced safety system, ADAS automatic driving, to window control, electric seat, reversing radar and key, At present, the number of MCU on an electric vehicle can reach dozens, and there may be hundreds in the future. According to IHS data, the global automotive MCU market is expected to reach US $8.9 billion in 2025.
We believe that the company’s Flash + DRAM + MCU businesses have strong long-term growth drivers, and the company is expected to achieve three arrows at the same time under the era of domestic substitution, with a clear long-term growth path.
Profit forecast
It is predicted that the company’s revenue from 2021 to 2023 will be RMB 8.510 billion, RMB 13.299 billion and RMB 16.321 billion respectively, and the EPS will be RMB 3.51, RMB 4.90 and RMB 6.11 respectively. The corresponding PE of the current stock price will be 42, 30 and 24 times respectively, and the “recommended” investment rating will be given.
Risk tips
Downside risks of industry prosperity, lower than expected progress of capacity climbing, increased industry competition, changes in overseas policies, etc.
