\u3000\u3 Guocheng Mining Co.Ltd(000688) 385 Shanghai Fudan Microelectronics Group Co.Ltd(688385) )
Key investment points
Performance summary: in 2021, the company achieved an operating revenue of 2.58 billion yuan, a year-on-year increase of 52.4%; The net profit attributable to the parent company was 510 million yuan, with a significant year-on-year increase of 287.2%.
The high prosperity of the industry has driven the growth of revenue, and the profit space of the company has been greatly released. 2021: 1) on the revenue side, the company achieved a revenue of 2.58 billion yuan, a year-on-year increase of 52.4%. 2) On the profit side, the company realized a net profit attributable to the parent company of 510 million yuan in the whole year, with a year-on-year explosive growth of 287.2%. Specifically, the gross profit margin and net profit margin of the company increased significantly, of which the gross profit margin in 2021 was 58.9%, a year-on-year increase of 13.0pp; The net interest rate was 21.7%, a year-on-year increase of 12.2pp. 3) On the expense side, the company’s sales expense rate was 6.7%, basically the same as last year; The rate of administrative expenses was 31.2%, a year-on-year decrease of 3.9pp; The R & D expense ratio was 26.8%, a year-on-year decrease of 2.2pp.
FPGA chip technology continues to make efforts, and 14 / 16nm process products are expected to continue to lead the market in the future. The company continues to take the lead in the mainland FPGA design industry and is the first manufacturer to launch 100 million gate FPGA products in China. By the end of 2021, the company has sold related FPGA products based on the 28nm process to more than 300 customers, and is currently actively developing the PSoC chip based on FPGA in the 28nm process, which has a large space in the fields of face recognition, computer vision and so on. In addition, the company’s 1 billion gate level FPGA products in 14 / 16nm process are actively developing breakthroughs. We expect that the company’s 14 / 16nm process FPGA is expected to gradually increase in volume in the next 1-2 years, providing impetus for the company’s long-term performance growth.
Multi core businesses go hand in hand, and the market share of products is leading. Benefiting from the high prosperity of the semiconductor industry, the three major businesses of the company have achieved rapid growth. The security and identification chip business was revived by the demand for downstream encryption chips and NFC chips, with a year-on-year increase of 42.2% over last year; In terms of nonvolatile memory, driven by the price increase of EEPROM, norflash and NAND products in the industry, the revenue increased significantly by 41.6% in 2021; Driven by the development of the Internet of things, the smart meter business maintained a high-speed development as a whole, with a significant year-on-year increase of 64.2%. From the market side, the market share of the company’s RFID chip, smart card chip, EEPROM, smart meter MCU and other products has been in the leading position in the industry, and the downstream has introduced well-known manufacturers at home and abroad such as Samsung, LG, vivo, Haier, Hisense and Lenovo. The market share is expected to continue to increase in the future.
Profit forecast and investment suggestion: the company has strong growth momentum in security identification chips, and FPGA chips are expected to complete the verification and shipment of 16 / 14nm process products from 2022 to 2023. It is expected to become the industry leader in the future, with strong medium and long-term growth. Based on the above considerations, we give the company 65 times PE in 2022, corresponding to the market value of 47.15 billion yuan and the target price of 57.9 yuan. We give the “buy” rating for the first time.
Risk tip: downstream demand is declining, product R & D progress is less than expected, and FPGA chip capacity is less than expected.
