\u3000\u3 Shengda Resources Co.Ltd(000603) 893 Rockchip Electronics Co.Ltd(603893) )
Event overview
The company released its annual report for 2021. During the reporting period, the company achieved a total operating income of 271860212155 yuan, a year-on-year increase of 45.90%; The net profit attributable to the shareholders of the listed company was Jinko Power Technology Co.Ltd(601778) 46915 yuan, a year-on-year increase of 88.07%; The basic earnings per share was 1.46 yuan, a year-on-year increase of 84.81%.
Analysis and judgment:
In 2021, the supply was in short supply, and the top flagship chip rk3588 was officially released
In 2021, the company achieved a total operating revenue of 2.719 billion yuan, a year-on-year increase of 45.90%; The proportion of operating revenue realized by intelligent application processor chips was 83.74%, with a year-on-year increase of 47.03%; The proportion of operating revenue realized by power management chips and other chips was 14.33%, with a year-on-year increase of 43.37%; The company realized a net profit attributable to shareholders of listed companies of 602 million yuan, an increase of 88.07% year-on-year. From the perspective of supply, the global foundry capacity was tight in 2021, and the company also faced the same problems. In the face of supply shortage, the company is also actively restructuring its supply chain. At present, it has begun to layout in multiple processes, and the balanced layout of main processes is 22nm, 14nm / 12NM, 8nm / 7Nm, etc. According to the annual report of 2021, the company produced 185969200 integrated circuit products in 2021, with a year-on-year increase of 46.17%. Under the background of such tight annual production capacity, the company can obtain more production, which reflects the company’s ability of supply chain management. However, due to the impact of supply on some of the company’s main products, the annual supply of some of the company’s main products only meets less than half of the demand. A major supplier of the company only provides about 70% of the average capacity supply in 2018, 2019 and 2020 in 2021, which hinders the growth of the company in the reporting period. As the intelligent application processor chip is the core hardware of downstream products, and the main products are polished and mature products with a long life cycle in the company’s entire product matrix, the limited supply of main products has a great impact on the company’s revenue growth. In terms of price, in order to maintain the ecological relationship with downstream customers under the background of substantial price increase in the industry, the company only offset the increase in upstream costs and maintained a balanced gross profit margin of about 40%. There is no case that excessive price increase will eventually hurt end customers in order to earn short-term profits. Considering the production expansion rhythm of upstream mature processes, it is expected that the tight supply of mature process capacity may continue until the second half of 2023, Therefore, we expect that the company’s products will face little pressure on price reduction in 2022. Generally speaking, we believe that the main factors affecting the company’s revenue in the next two years are upstream chip supply and downstream demand development, mainly focusing on the factor of “quantity”. In 2021, the company released the top flagship chip rk3588, which we believe has the following strategic significance: 1. The top flagship chip adopts the advanced technology of 8nm, which is the key R & D project of the company in recent two years. The success of product streaming represents that the company’s R & D strength has entered a higher platform; 2. The launch of flagship chips has enriched the company’s product echelon, enabling the company to complete the layout of high, medium and low-end products in many fields, which will greatly facilitate the company’s market development in relevant fields; 3. Moving towards more advanced manufacturing process is also one of the effective means to alleviate the shortage of production capacity. Therefore, we are optimistic about the continuous development of the company in many fields and customers.
Breakthroughs have been made in many fields, and multi-dimensional growth has reached
According to the contents of the company’s 2021 annual report, even if the global foundry capacity in mature processes is still tight in the next two years, “compared with Rockchip Electronics Co.Ltd(603893) , the supply in 2022 will be greatly alleviated even in mature processes compared with that in 2021″. Considering the supply and demand gap in 2021 and the life cycle of the company’s products, we believe that the year-on-year increase in the capacity of relevant products in 2022 will certainly achieve rapid sales landing and bring revenue growth, This is one of the points we are optimistic about the company’s revenue growth in the next two years. In terms of incremental products, during the reporting period, new products such as machine vision chip rv1109 / rv1126 series and intelligent application processor rk3566 / rk3568 series have contributed nearly 20% of the annual revenue, resulting in a significant increase in revenue in 2021. We believe that these new material numbers have gradually matured and entered the sales landing period after one or two years of polishing. In many downstream fields, such as security monitoring, industrial application, automotive application market and other directions, the company has basically completed the construction of product matrix. We expect to see the company’s sales breakthrough in these fields in 2022, and these new fields will also drive the growth of the company’s revenue from the demand side. In addition, the company’s analog-to-digital hybrid chip products include power management chips, fast charging protocol chips, multimedia interfaces and wireless chips. In 2021, the company’s power management chips and other chips accounted for 14.33% of its operating revenue, with a year-on-year increase of 43.37%. On the whole, we believe that the company has the following advantages: 1. Strong R & D strength; 2. Strong supply chain management ability; 3. Rich product line; 4. Huge end customer ecosystem. Therefore, we are optimistic about the company’s future development and performance growth in the short, medium and long term.
Investment advice
Maintaining the performance forecast for 2022 and 2023 unchanged, the company’s revenue from 2022 to 2023 is expected to be RMB 4.348 billion and RMB 5.868 billion respectively, and the net profit attributable to the parent company is expected to be RMB 912 million and RMB 1.272 billion respectively. It is estimated that the company’s revenue in 2024 will be 7.335 billion yuan and the net profit attributable to the parent company will be 1.562 billion yuan. From 2022 to 2024, the corresponding EPS is 2.18 yuan, 3.05 yuan and 3.74 yuan respectively, and the corresponding closing price of 99.11 yuan on March 22, 2022, PE is 45.36 times, 32.51 times and 26.48 times respectively. Considering the long-term broad market of aiot track, the continuous development of the company’s product categories, the continuous development of customers and the continuous improvement of supply caused by the continuous move of product manufacturing process to a higher level, the “buy” rating is maintained.
Risk tips
The R & D progress and market acceptance of new products are lower than expected; The demand for chips fluctuated sharply; The capacity of upstream wafer foundry is tight; Macroeconomic deterioration.
