\u3000\u3 Shengda Resources Co.Ltd(000603) 893 Rockchip Electronics Co.Ltd(603893) )
Event: the company released its annual report for 2021. The annual revenue was 2.72 billion yuan, a year-on-year increase of 45.9%, and the net profit attributable to the parent company was 600 million yuan, a year-on-year increase of 88.1%. Among them, Q4 achieved a revenue of 660 million yuan in a single quarter, a year-on-year increase of 3.7%, and the net profit attributable to the parent company was 190 million yuan, a year-on-year increase of 47.7%, setting a new high of net profit in a single quarter.
The high boom of aiot promotes the high growth of performance, and the intelligent AP product line is improving day by day. In 2021, the company’s intelligent application processor chips accounted for 83.74% (year-on-year + 47%), of which the chip with built-in NPU accounted for 20.64% (year-on-year + 137573%), while the power management chip and other chips accounted for 14.33% (year-on-year + 43.4%). The high growth of the company’s performance mainly benefited from the market demand in the downstream aiot field, diversified product layout and the optimization of shipping structure. In 2021, affected by the shortage of chip capacity, a major supplier of the company provided only about 70% of the average capacity supply in the past three years, resulting in the annual chip sales of 170 million, a year-on-year increase of 34.3%. However, the company actively promotes new products with high value. Rv1109 / rv1126 series and rk3566 / rk3568 contribute nearly 20% of the revenue. Chips with more than $10 have accounted for about 40% of the company’s revenue. The annual gross profit margin of the company reached 40%, and the overall expense rate decreased slightly compared with the same period. The management expense rate was 3.3%, and the sales expense rate was 1.9%. In terms of R & D expenses, the company continued to increase research and development and consolidate core technologies. The annual R & D expenses totaled 560 million yuan, a year-on-year increase of 49%, and the R & D expense rate reached 20.6%.
The flagship rk3588 drives a new growth pole, and the equity incentive scheme shows confidence. In December 2021, the company launched high-performance processor rk3588, which made up for the gap of high-performance general-purpose processor in China. The flagship chip is designed by 8nmfin FET process, equipped with quad core A76 and quad core A55 eight core CPU, quad core G610 high-performance armgpu, and built-in 6tops high-power NPU. At present, the company is actively promoting the introduction and promotion of rk3588 in eight markets, including armpc, tablet, high-end camera, NVR, 8K and large screen equipment, automotive intelligent cockpit, cloud service equipment and edge computing, AR / VR, etc. in the future, rk3588 is expected to become a new growth pole for the company’s growth. In addition, in January, the company issued an equity incentive plan to grant 3 million equity incentives to 137 objects, including core technicians and technical business backbones, accounting for 0.72% of the total share capital. The incentive plan takes the growth rate of operating revenue or net profit of not less than 20% / 44% / 73% in the next three years as the assessment target, with a compound growth rate of 20%, the exercise price of 121.04 yuan / share, and the exercise price higher than the closing price of the day. We believe that the incentive depth binds the interests of core employees, fully demonstrating the company’s confidence in medium and long-term performance and stock price.
Profit forecast and investment suggestions. It is estimated that the company’s EPS from 2022 to 2024 will be 2.16 yuan, 2.97 yuan and 3.96 yuan respectively. The net profit attributable to the parent company will maintain a compound growth rate of 40% in the next three years and maintain the “buy” rating.
Risk warning: the risk of new product promotion and customer introduction falling short of expectations; The risk of shortage of upstream wafer supply and price rise; Risks of intensified industry competition; Risk of exchange loss due to exchange rate fluctuation.
