\u3000\u3 Bohai Water Industry Co.Ltd(000605) 111 Wuxi Nce Power Co.Ltd(605111) )
Event:
The company released its annual report for 2021: in 2021, the company achieved a revenue of 1.498 billion yuan (a year-on-year increase of 56.89%), and a net profit attributable to the parent company of 410 million yuan (a year-on-year increase of 194.55%); Among them, in the single quarter of 2021q4, the company realized a revenue of 399 million yuan (a year-on-year increase of 38.06% and a month on month decrease of 5.55%), and a net profit attributable to the parent company of 100 million yuan (a year-on-year increase of 159.64% and a month on month decrease of 26.82%).
Key investment points:
The performance in 2021 was in line with expectations, and the optimization of product structure + industry prosperity helped the company’s performance increase. Benefiting from the optimization of the company’s product structure and the high prosperity of the industry, the company’s production and sales are booming, and the company’s performance has achieved rapid growth. In 2021, the company sold 2215800 pieces of power devices (a year-on-year increase of 21.79%). In terms of business, the revenue of power device business was 1.352 billion yuan (a year-on-year increase of 73.77%), the gross profit margin was 38.71% (a year-on-year increase of 12.84 PCT), the revenue of chip business was 142 million yuan (a year-on-year decrease of 18.77%), and the gross profit margin was 41.43% (a year-on-year increase of 18.97 PCT). The company’s product structure has been significantly optimized. In 2021, IGBT products achieved revenue of 81 million yuan (a year-on-year increase of 529.44%), accounting for 5.39% (a year-on-year increase of 4.05 PCT). As the product process platform with the most domestic alternative material numbers of the company’s medium and low voltage products, shielded gate MOS achieved revenue of 584 million yuan (a year-on-year increase of 92.70%) and 38.96% (a year-on-year increase of 7.27 PCT) in 2021. The company’s ability to control expenses has been steadily improved. In 2021, the company’s expense rate (excluding R & D) was 2.29% (a year-on-year decrease of 1.03pct), of which the rates of sales, management (excluding R & D) and financial expenses were 1.39% (a year-on-year decrease of 0.06pct), 2.06% (a year-on-year decrease of 0.47pct) and – 1.14% (a year-on-year decrease of 0.52pct).
Multi-point R & D and continuous optimization of customer structure. In terms of R & D, the company continued to increase R & D investment. In 2021, the R & D cost was 80 million yuan (a year-on-year increase of 54.05%), with remarkable results: the IGBT platform has stably produced 12 inch 1200V high-frequency low saturation voltage drop products, which are mainly used in the photovoltaic inverter industry. At present, it has been applied in large quantities in a number of typical customers in the industry. Meanwhile, the preliminary development of 650vigbt products has been completed, and a number of IGBT module products have entered the stage of small batch production; For the third generation semiconductor platform, the development of sicmos for 1200V new energy vehicles was successful, and the first streaming verification of 650ve modeganhemt was completed; MOS platform and super junction fourth generation platform have formed a complete product series of 500V ~ 700V. The specification and model of low-voltage second-generation sgtmos have been expanded, and the number of products has been increased to 18. At the same time, the development of n-type medium and low-voltage process platform of multiple trench MOS has been completed on the 12 inch production line. The company’s customer structure has been significantly optimized. In 2021, it will focus on expanding customers in the fields of automotive electronics, photovoltaic and 5g base station power supply. It has focused on leading customers in Byd Company Limited(002594) and other industries. The products are supplied in large quantities. The new energy business including photovoltaic inverter and energy storage will become an important growth point of the company’s future performance. The company has significant advantages in industrial chain cooperation, and has formed close cooperation with many excellent suppliers in the industrial chain. The production capacity of electric based integrated packaging has been released to provide guarantee for the company’s performance.
Actively layout the third generation semiconductor and power module field, and the company has sufficient growth momentum. The company focuses on the R & D, design and production of semiconductor power devices, continuously promotes the R & D and industrialization of high-end power MOSFET, IGBT and integrated power devices, and expands to SiC / GaN, drive IC, power module and other fields. The company announced on 2021m11 that it plans to raise no more than 1.45 billion yuan by means of non-public offering. The layout: (1) SiC / GaN power device and package test R & D and industrialization project (200 million yuan). According to the company’s announcement, the scale of China’s third-generation semiconductor market in 2019 is 9.415 billion yuan. It is estimated that the market scale may reach 62.342 billion yuan in 2022, and the CAGR from 2019 to 2022 is 87.78%. The project is conducive to further upgrading the product structure of the company, seizing the technical highland of wide band gap semiconductor power devices and improving the competitiveness of the company; (2) Power driven IC and IPM R & D and industrialization project (600 million yuan). Yole data show that the global gate drive IC market revenue in 2016 was US $1.2 billion, and the CAGR is expected to be 5.1% from 2017 to 2022. NXP, Infineon and other overseas giants account for more than 50% of the market share in the gate drive IC market. In 2020, the global IPM market will reach US $16.8 billion, with foreign brands accounting for 86% of China’s market, and there is also a large space for domestic substitution. The project will help the company form a complete set with the existing products, optimize the product structure, narrow the gap with the international advanced level, and gradually realize the substitution of domestic products; (3) R & D and industrialization project of power integration module (including vehicle specification level) (500 million yuan). Benefiting from the downstream boom demand of new energy vehicles and new energy power generation, the IGBT module market has ushered in rapid expansion. The project is conducive to the company to grasp the market opportunity, optimize the product structure and realize the domestic substitution of power modules. The company announced in 2021m12 that it plans to implement the restricted stock incentive plan to the core management, technology, business and other personnel, and complete the grant of 1141000 restricted shares in 2022m2. We believe that this will help the company bind the core and backbone personnel and improve the competitiveness of the company. In the short term, the company is expected to fully benefit from the high prosperity of the industry and strong performance certainty; In the medium and long term, the company is expected to benefit from the large volume of new products such as IGBT, power module and drive IC, the continuous optimization of product structure and customers, and rise rapidly under the background of accelerated domestic substitution.
Profit forecast and investment rating: the company is a leading power device design enterprise in China, with leading product technology and rich categories. The company has established a long-term and stable cooperative relationship with upstream and downstream, with obvious synergy advantages in the industrial chain. At the same time, it actively optimizes the product, market and customer structure. At present, the company’s products have entered the supply chain of leading manufacturers in the fields of photovoltaic, automotive electronics and industrial control, and actively layout the emerging fields such as third-generation semiconductor, power module and drive IC. As one of the few manufacturers in China who master the core technology of high-end power devices, the company has complied with the industry business cycle and domestic substitution opportunities and grown rapidly. Based on the principle of prudence, without considering the impact of additional issuance and equity incentive on the company’s performance and share capital for the time being, we expect that the company’s net profit attributable to the parent company will be 537 / 676 / 828 million yuan respectively from 2022 to 2024, and the corresponding EPS will be 3.76/4.74/5.80 yuan / share respectively, corresponding to the current PE valuation of 49 / 39 / 32 times, maintaining the “buy” rating.
Risk warning: the downstream demand is less than the expected risk; Risk that the progress of additional issuance is less than expected; Risk that the company’s product R & D progress is less than expected; Risk that the progress of product introduction is less than expected.
