\u3000\u3 Guocheng Mining Co.Ltd(000688) 018 Espressif Systems (Shanghai) Co.Ltd(688018) )
Core view
Event:
The company issued the 2021 annual report
Comments:
The prosperity of the Internet of things has improved, and the sales volume of the company’s module products has doubled. In 2021, the company realized 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 + 90.70%. Among them, the revenue of module and chip products was 814 million and 553 million yuan respectively, with a year-on-year increase of + 114.11% and + 25.22%. The sales volume of module products doubled, with an annual sales of 807926 million, a year-on-year increase of + 111.68%. Under the strong demand of the Internet of things, the overall shipment of the company’s products increased by 30% – 40% year-on-year, which is equivalent to an increase of 50% – 55% in the shipment of the same product.
The increase in the proportion of modules led to a slight decline in the comprehensive gross profit margin, and the net profit margin rebounded under the scale effect. In 2021, the company’s gross profit margin was 39.60%, with a year-on-year increase of -1.69pct; The net interest rate was 14.31%, a year-on-year increase of + 1.79pct. Among them, the gross profit margin of the chip was 48.94%, with a year-on-year increase of + 3.23pct; The gross profit margin of the module was 33.48%, with a year-on-year decrease of -2.52pct, which was mainly due to the increase in the cost caused by the expansion of the memory chip capacity used by the module. The company conducted the upstream OEM price increase downward smoothly. In 2021, the company’s chip and module ASP were 3.79 yuan and 10.07 yuan respectively, with a year-on-year increase of + 11.12% and + 1.15%.
The company takes “processing + connection” as the product direction to build an Internet of things platform company. Starting from Wi Fi MCU, the company has gradually expanded the field of Wireless SoC in the direction of “processing + connection”, covering chip design technologies such as AI, risc-v MCU, Wi Fi 6, Bluetooth Le, thread / ZigBee and so on. In addition to chip design, the company also continues to invest in software technology, focusing on the core of aiot, covering tool chain, compiler, operating system, application framework, AI algorithm, cloud products, app, etc., so as to realize the closed-loop solution of software and hardware integration in the field of aiot.
The intelligent rate is improved, the market space is expanded, and the product line expansion + cloud business collaboration brings continuous growth. From the perspective of downstream demand, with the improvement of the penetration rate of smart home and consumer electronics and the breakthrough of intelligence in other industries from 0 to 1, the company’s corresponding downstream market space is constantly opened. From the perspective of the company’s own business development, the continuous expansion of the company’s chip product line and the synergy brought by the cloud business jointly ensure the continuous growth of the company’s business.
Profit forecast: we expect the net profit attributable to the parent company in 2022, 2023 and 2024 to be RMB 287 / 3.8/509 million respectively, corresponding to the PE of the share price on March 14 to be 41 / 31 / 23 times respectively. It is covered for the first time and given a “buy” rating.
Risk tip: industry competition intensifies, supply chain continues to be in short supply, and R & D progress is less than expected.
