\u3000\u30 Guangdong Tengen Industrial Group Co.Ltd(003003) 27 Sino Wealth Electronic Ltd(300327) )
Event: the company released its annual report for 2021 on March 29. In 2021, the company achieved revenue of 1.494 billion (YoY + 47.58%), net profit attributable to parent company of 371 million (YoY + 77%), and annual gross profit margin of 47.43%, with a significant year-on-year increase of 6.88pct, mainly due to the impact of product price rise and product structure change. In the single quarter of 21q4, the company achieved a revenue of 400 million (YoY + 48.07%, qoq-1.76%), a net profit attributable to the parent company of 103 million (YoY + 74.01%, qoq-10.94%), and a gross profit margin of 49.53% (YoY + 9.57pct, qoq-0.26pct) in 21q4. At the same time, the company released the performance forecast of Q1 in 2022. It is expected that the net profit attributable to the parent company of 22q1 will increase by 50% – 65% year-on-year to 101112 million yuan (median QoQ + 3.72%).
MCU: deeply benefited from domestic substitution, and the matrix of high-end products has been continuously improved. 1) White power MCU: in the past 21 years, affected by the global shortage of MCU, Chinese white power manufacturers accelerated the introduction of domestic MCU schemes, and the supply focus of large overseas manufacturers tilted to automotive electronics and other fields. The localization of Chinese white power MCU accelerated, and the company’s white power MCU still achieved high growth under the condition of limited production capacity; At the same time, the company has made a breakthrough in mass production in the field of variable frequency household power. In 22 years, with the release of new production capacity, it is expected that the market share of white power MCU of the company will be further improved. 2) MCU of small household appliances: China’s leading manufacturer has gradually withdrawn from the market of low price and low gross profit under the condition of limited production capacity in 21 years to serve head customers. At present, the company has mass produced 32-bit MCU in large clients of small household appliances. 3) Automotive MCU: the company’s first vehicle specification MCU is expected to be launched in mid-2022, which is mainly used in general fields such as body control. If it goes well, it is expected to be introduced into customer mass production in 2023.
Lithium battery management chip: head mobile phone brand customers continue to make breakthroughs and market share continues to increase. 1) Smart application market: in 2021, the company’s lithium battery management chip was promoted and mass produced in China’s top mobile phone brand customers, with a significant growth in performance. In 2022, with the continuous introduction and volume of new customers, the share will achieve a further breakthrough; 2) Power application market: benefiting from the implementation of the new national standard electric bicycle and the development of Shanxi Guoxin Energy Corporation Limited(600617) energy storage market, the performance of lithium battery management chip for power application continues to maintain a high growth rate and obtain a good market share. In addition, with the increasing requirements of lithium battery management chip for measurement technology, the company’s design platform is gradually transitioning from 8-bit to 32-bit, and the manufacturing process is refined from 8-inch to 12-inch 90nm / 55nm.
Target: wide market for OLED driver manufacturers in China. In 2021, the company’s AMOLED display chip revenue increased several times, mainly due to the new FHD + mobile phone screen product of AMOLED display driver chip, which has been mass produced and adopted by many panel factories. It has been rapidly sold in the smart phone aftermarket, and wearable products have also entered the brand market. In the future, as the company’s AMOLED display driver chip enters the mobile phone brand market, the market space will be further opened.
Investment suggestion: it is estimated that the net profit attributable to the parent company in 2022, 23 and 24 will be RMB 515, 66 and 779 million respectively, and the corresponding current price PE will be 34, 26 and 22 times respectively. The company is a leading industrial control MCU manufacturer in China. The growth momentum of home appliance MCU, BMIc, display driver chip and other product lines is clear, and the “recommended” rating will be maintained.
Risk warning: the risk of downstream market fluctuation; The risk of intensified market competition; The risk that R & D progress is less than expected; Risk of rising raw materials.
