Universal Scientific Industrial(Shanghai)Co.Ltd(601231) ( Universal Scientific Industrial(Shanghai)Co.Ltd(601231) . SH) released the annual report of 2021 on March 28. The report shows that the company achieved a total operating revenue of 55.3 billion yuan in 2021, a year-on-year increase of 15.94%; The net profit attributable to the parent company was 1.858 billion yuan, with a year-on-year increase of 6.81%. Under the pressure of tight supply chain and continuous appreciation of RMB, the company’s revenue growth still reached the flag of 15% growth set in early adulthood.
According to the February revenue disclosed in Universal Scientific Industrial(Shanghai)Co.Ltd(601231) 3 on March 9, the combined revenue in the first two months of this year exceeded 9 billion yuan, with a year-on-year increase of 28.55%, realizing a “good start”.
Universal Scientific Industrial(Shanghai)Co.Ltd(601231) continues to maintain steady growth, and the performance growth rate is expected to increase in 2022. Specifically, Universal Scientific Industrial(Shanghai)Co.Ltd(601231) has made great efforts to expand production in recent years, with rapid growth of vehicle power business and clear development plan, which is the main driving force for revenue growth in the future.
SIP module contributes about 60% of the company’s 2021 annual revenue
Universal Scientific Industrial(Shanghai)Co.Ltd(601231) was founded in 1976. In 2020, the revenue scale of electronic manufacturing services (EMS / ODM) ranked 12th in the world. Its main business includes five product categories: communication, consumer electronics, computers and storage, industry and medical treatment, and automotive electronics.
Electronic manufacturing service usually covers a series of service links such as design, development, manufacturing, procurement, logistics and after-sales, which belongs to a fully competitive industry. According to the research of NVR, in 2017, 2018 and 2019, the revenue of the world’s top 10 manufacturers accounted for 81%, 73% and 70% of the whole market, and the industry concentration was always at a high level.
according to the report of Universal Scientific Industrial(Shanghai)Co.Ltd(601231) Market Research Institute, the global EMS / ODM revenue scale will reach 640 billion US dollars in 2021, which is expected to reach 830 billion US dollars in 2025, and the average annual compound growth rate (CAGR) from 2021 to 2025 is about 6.7%.
Universal Scientific Industrial(Shanghai)Co.Ltd(601231) ‘s technical advantage lies in miniaturization. It is a global leader in system level packaging SIP and wearable electronic product manufacturing. At present, its SIP module products mainly involve WiFi module, UWB module, AIP module, fingerprint identification module, intelligent wearable watch and headset module. SIP module contributes about 60% of the company’s revenue in 2021.
Sip, namely system in package, can package and integrate bare chips and miniaturized components with different functions. Multiple chips are added into the package, which greatly reduces the package volume and weight, so as to improve the packaging efficiency and chip performance. It is an important driving force for the current advanced packaging market.
At this stage, the mobile consumer electronics field represented by smart phones is the largest downstream application market of SIP, accounting for 70% of the downstream applications of SIP. Yole predicts that in the next five years, the fastest-growing application market of SIP will be wearable devices, Wi Fi routers, IOT Internet of things facilities and telecommunications infrastructure. Especially with the promotion and popularization of 5g communication, the demand of 5g base station for flip ball grid array (fc-bga) SIP chip will rise sharply. The market scale of base station SIP chip CAGR is expected to be as high as 41% in the next five years.
According to yole data, the global SIP market revenue in 2019 is US $13.4 billion. By 2025, the global SIP market revenue is expected to increase to US $18.8 billion, with CAGR of 6%.
Universal Scientific Industrial(Shanghai)Co.Ltd(601231) chairman Chen Changyi said in an exclusive interview with China business that the Universal Scientific Industrial(Shanghai)Co.Ltd(601231) core SIP module acts as a technical bridge from IC packaging to PCB system assembly. In the field of electronic manufacturing services, Universal Scientific Industrial(Shanghai)Co.Ltd(601231) is the manufacturer with the largest shipment of SIP modules, with an annual shipment of more than 700 million.
With the increasing complexity of chips, the demand for heterogeneous integration of chip functions has become more and more important in recent years. With the increasing cost of high-end processes and the trend of high integration with the complexity of functions, heterogeneous integration is a major trend in the semiconductor industry in the future. Compared with high-end processes, ” Universal Scientific Industrial(Shanghai)Co.Ltd(601231) ‘s SIP technology is a platform for the whole industry to achieve more efficient and lower cost heterogeneous integration.”
In terms of SIP module business, the main competitors faced by Universal Scientific Industrial(Shanghai)Co.Ltd(601231) include Amkor, Jcet Group Co.Ltd(600584) , Luxshare Precision Industry Co.Ltd(002475) , Murata (Murata), Goertek Inc(002241) , Wingtech Technology Co.Ltd(600745) are also actively developing SIP module. In the key technology of highly integrated and miniaturized design of SIP module, Universal Scientific Industrial(Shanghai)Co.Ltd(601231) high density SMT technology realizes the minimum part spacing of 50 microns and 3dsmt mounting, the plastic packaging process realizes professional double-sided plastic packaging and film plastic packaging, and a new cutting technology combining laser cutting and traditional saw blade cutting technology.
In terms of production capacity, Universal Scientific Industrial(Shanghai)Co.Ltd(601231) 2018 began to accelerate the layout of overseas production capacity, acquired the Polish plant in 2018, started the expansion of production in Mexico in 2019, completed the merger and acquisition of Feixu group in France in 2020, and put into operation the new Vietnam plant and Huizhou plant invested in 2021 Universal Scientific Industrial(Shanghai)Co.Ltd(601231) disclosed to China first finance that the above investment has accelerated the growth of the company’s EMS / ODM business revenue other than SIP module. The business revenue scale was about US $2 billion in 2019 and about US $3.2 billion in 2021.
In terms of R & D, Universal Scientific Industrial(Shanghai)Co.Ltd(601231) 2020 began to invest in the miniaturization innovation center. The new product introduction line of highly integrated module SIP invested in Zhangjiang, Shanghai in 2021 has been put into trial production at the end of November. In the future, the miniaturization module of the company will also serve more modular products such as consumer electronics, industrial products and vehicle electricity.
“In addition to continuously optimizing the global localized manufacturing services, the company will also improve its design capabilities. For example, medical and emerging wearable products can give full play to the advantages of Universal Scientific Industrial(Shanghai)Co.Ltd(601231) miniaturization, and it is also an opportunity for long-term growth. As long as there is a demand for modularization and miniaturization, it will bring a lot of business opportunities to Universal Scientific Industrial(Shanghai)Co.Ltd(601231) .” Chen Changyi said.
vehicle power business increased by 50% this year
In recent years, semiconductor manufacturers have made great efforts to layout the automotive electronics business, which is also the key investment direction of Universal Scientific Industrial(Shanghai)Co.Ltd(601231) in the future.
Chen Changyi said that the product line related to automobile power is the fastest growing field with compound growth rate in the next decade. Thermal management, electric drive system, power electronics, electronic and electrical, etc. are the fields that Universal Scientific Industrial(Shanghai)Co.Ltd(601231) will focus on in the next 5-10 years, and will make more in-depth investment in AC / DC converter, charger and power module.
Automotive electronic devices involve a large number of MEMS and sensors, power supply, communication chips, lighting components and processors. The growth of the number of automotive electronic devices will promote the development of the packaging market. According to yole’s prediction model, the packaging development route of the automotive industry will extend to higher-end technology, and the advanced packaging market will rise. Yole data show that the total revenue of the automotive electronic packaging market in 2018 is about US $5.1 billion, which will increase to about US $8.9 billion in 2024, and the CAGR will reach 9.7% from 2018 to 2024.
In recent years, the revenue of huanxu automotive electronics business has continued to grow. According to the data of Tonglian datayes!, From 2018 to 2020, Universal Scientific Industrial(Shanghai)Co.Ltd(601231) automotive electronics revenue was 1.651 billion yuan, 1.773 billion yuan and 1.691 billion yuan respectively. The company’s 2021 annual report shows that the revenue of automotive electronics products in 2021 has reached 2.605 billion yuan.
Universal Scientific Industrial(Shanghai)Co.Ltd(601231) this year’s automotive electronics business aims to grow by 50%. According to the survey summary of the company’s investors, its vehicle power business is mainly divided into four categories: powertrain, domain control, ADAS and bodycontrol. In 2021, it accounted for 92% of the overall vehicle power revenue, accounting for 10%, 25%, 4% and 53% of the vehicle power revenue respectively.
Universal Scientific Industrial(Shanghai)Co.Ltd(601231) looking forward to the business development in 2022, it is expected that the proportion of powertrain will increase to 27%, reaching US $15 million, the proportion of bodycontrol will be adjusted to 35%, domaincontrol will increase to 27%, and the revenue of the overall vehicle power business will increase by 50%.
Universal Scientific Industrial(Shanghai)Co.Ltd(601231) svp and Su Guorong, head of the group’s vehicle power business, disclosed at the investor’s online briefing held on February 9 that the revenue and profit of the company’s vehicle power business will grow rapidly in the next 5-10 years. By 2024, the revenue of the vehicle power business will exceed US $1 billion.
Chen Changyi told first finance that ” Universal Scientific Industrial(Shanghai)Co.Ltd(601231) has a long history of vehicle electricity business. Under the new situation of rapid development of new energy vehicles, there is a lot of room for development. It needs to introduce a lot of talents and jump out of the past model to speed up investment layout and customer expansion. Compared with the past, the style of stable and healthy development will be more active and change in time.”
revenue growth is expected to increase, focusing on the impact of supply chain and gross profit margin
Universal Scientific Industrial(Shanghai)Co.Ltd(601231) disclosed the business target for the first quarter of 2022 in the performance express. It is expected that the operating revenue will increase by 20% ~ 25% year-on-year, and the operating profit margin is better than that of the same period last year. The company has disclosed that from January to February this year, the operating revenue increased by 28.55% year-on-year. According to this trend, the growth target of 20% – 25% in the first quarter can be achieved.
However, the global chip supply is tight in 2021, which has a great impact on the electronics and automobile industry chain. “A few years ago, the upstream wafer industry of the global electronics industry was underinvested, resulting in an imbalance between chip supply and demand. At present, the newly invested wafer production capacity has been put into operation, and the trend is about to be reversed. It is expected to improve significantly by the end of this year or early next year,” Chen Changyi told China business The most direct impact is that the products cannot be completed due to the shortage of upstream chips, and the increased inventory takes up more working capital. “After the problem of poor supply chain is solved, the inventory will be digested quickly, which is a short-term factor.”
In addition, the market pays more attention to the gross profit margin of Universal Scientific Industrial(Shanghai)Co.Ltd(601231) . According to the connected data, datayes! From 2018 to 2020, Universal Scientific Industrial(Shanghai)Co.Ltd(601231) gross profit margin was 10.86%, 9.96% and 10.45% respectively, and net profit margin was 3.52%, 3.39% and 3.63% respectively. In 2021, the Universal Scientific Industrial(Shanghai)Co.Ltd(601231) gross profit margin was 9.9%, a year-on-year decrease of 0.55 percentage points, and the net profit margin was 3.36%, a year-on-year decrease of 0.27 percentage points Universal Scientific Industrial(Shanghai)Co.Ltd(601231) reply to China first finance and economics that some new costs and expenses in 2021 have an impact on the gross profit margin and net profit, including the allocation of asset premium for the acquisition of Feixu, the one-time cost of prepaying the M & a loan, the preliminary cost of new Huizhou plant and Vietnam plant, the increase of export logistics cost, the appreciation of RMB, etc. in 2022, these costs or expenses will be reduced or no longer occur.
The gross profit margin of Universal Scientific Industrial(Shanghai)Co.Ltd(601231) future auto electronics business is about 8% in 2021, which is significantly lower than that of its industrial, computer and storage products. Chen Changyi said that the customer introduction period of automotive electronic products is long. Universal Scientific Industrial(Shanghai)Co.Ltd(601231) has invested in the field of electric vehicle power module for nearly three years. This year, mass production and shipment have been realized, and the follow-up will enter rapid growth. “A mass production order for automotive electronic products may have a life cycle of seven or even more years. The growth of gross profit requires a little investment patience, but it is very worthwhile.”
In terms of how to improve the profitability in the future, Universal Scientific Industrial(Shanghai)Co.Ltd(601231) replied to China first finance and economics that from the perspective of operation, the rate of return on investment will be improved from the following aspects. 1. Increase R & D investment, improve product added value and increase products with high gross profit margin; 2. Vigorously expand customers of automotive electronics and industrial products, increase the proportion of revenue and optimize the revenue structure; 3. Increase investment in intelligent manufacturing and it systems, improve production efficiency, optimize supply chain management and reduce operating costs; 4. Continuously improve the company’s global operation ability, optimize the efficiency of global sales, customer service and manufacturing, procurement and logistics system.
