\u3000\u30 Guangdong Tengen Industrial Group Co.Ltd(003003) 27 Sino Wealth Electronic Ltd(300327) )
Key investment points
In 2021, the capacity was limited, the revenue doubled and the net profit increased by nearly 80%. The company issued the 2021 annual report:
1) 2021: revenue of 1.494 billion yuan (nearly half of household appliance MCU, followed by lithium battery management chip and AMOLED display driver chip), year-on-year + 48%; The net profit attributable to the parent company was 371 million yuan, a year-on-year increase of + 77%; The gross profit margin was 47.43%, year-on-year + 6.88pct, and the net profit margin was 24.81%, year-on-year + 5.04pct.
2) 21q4: revenue of 400 million yuan, up + 48% year on year and - 2% month on month; The net profit attributable to the parent company was 103 million yuan, up + 75% year on year and - 10% month on month; The gross profit margin was 49.53%, with a year-on-year increase of + 9.57pct and a month on month increase of -0.26pct; The net interest rate was 25.42%, with a year-on-year ratio of + 4.09pct and a month on month ratio of -3.20pct.
The 22q1 epidemic affected production capacity, and the performance was still strong and growing month on month. At the same time, the company released the performance forecast for the first quarter of 2022: the net profit attributable to the parent company was 101112 million yuan, a year-on-year increase of + 50% - 65%, calculated by the median value of 106 million yuan, a year-on-year increase of + 57% and a month on month increase of + 3%; Deduction of non RMB 101111 million, with a year-on-year increase of 73% - 90%. Calculated according to the median value of RMB 106 million, it is + 83% year-on-year and + 3% month on month. The Q1 epidemic affected the commencement of the company's important OEM and ship technology. The ship was shut down on February 14, 2022 and resumed work on the 24th of the same month. The company assessed that the impact of the shutdown on the annual revenue was within 3%.
In 2022, the order volume is still full, and the products will continue to be in short supply, benefiting from the general trend of domestic substitution. From the supply side, the production capacity in 2021 restricts the company's growth, and the production capacity in 2022 is still the key bottleneck of performance growth. 2021q3 company guarantees the production capacity by paying large advance payment and guarantee deposit. It is expected that the production capacity will increase quarter by quarter, and continues to focus on the company's production capacity expansion. From the demand side, the company's order demand is full, and the order demand is still strong compared with previous years. In the application market of the company's main products, the penetration rate of domestic chips is still low, and the company has long-term sustainable development space.
Power management: the products are in short supply, the technology remains the leader in the mainland, and the downstream applications blossom at many points. The sales of lithium battery management chips increased more than times year-on-year. The chip's requirements for measurement technology continue to improve, mainly reflected in the improvement of measurement accuracy / sampling accuracy / reliability / memory capacity / encryption performance. The design platform is gradually transitioned from 8 bits to 32 bits, the process is refined from the early 0.25/0.11um to 90 / 55nm, and the process withstand voltage is increased from 20V to 80 / 120V or even higher. The company will continue to maintain the leading position in the mainland in this field. From the perspective of downstream applications of products: 1) mobile terminal: successfully explore China's top brand customers, make a breakthrough in mass production, achieve substantial growth in performance, and maintain rapid growth in the future. 2) Power battery: the company occupies the mainstream position in the application IC of electric bicycle controller in the market. The company will benefit from the trend of vehicle replacement brought by the implementation of the new national standard electric bicycle and the development of Shanxi Guoxin Energy Corporation Limited(600617) energy storage market in China, and its performance will continue to maintain a high growth rate. 3) Laptop: laptop products have high requirements and long certification cycle. The company's products have been recognized and adopted by major brand manufacturers, and are in the growth period of domestic substitution. With the growth of demand for medium and high-end computer peripherals, the company will continue to benefit. The potential market size reaches 8 billion yuan, the market share of the company is only single digits, and the company has broad room for improvement.
MCU: it is inclined to everyone's power, with strong demand and limited growth of production capacity. The competition pattern of large household appliances is better than that of small household appliances. When the supply exceeds the demand, the company tilts the production capacity. From the specific application, we can see: 1) large household appliances: there is a serious shortage of MCU in 2021. The company is the main choice for Chinese white household appliance manufacturers to replace them domestically. Although it can not fully meet the demand, it has achieved good growth through capacity tilt, and the company has made a breakthrough in mass production in the field of variable frequency household appliances. Overseas Renesas, NEC, STM, Ti and other companies monopolize the market of household electric MCU, and the company's share is only 10%. The localization rate of white electric MCU in mainland China is low, while overseas manufacturers prefer automotive electronics. It is expected that there will continue to be out of stock this year, the localization process will be accelerated, and the company's market share is expected to continue to increase. 2) Small household appliances: in the first half of 2021, the market of household appliances and kitchen appliances grew rapidly, and the market demand slowed down in the second half of 2021. Due to limited production capacity, the company strategically abandoned the product market of low price and low gross profit. The company took the lead in mass production of 32-bit MCU in the large client of small household appliances. It is expected that the supply and demand of household appliance based kitchen appliance MCU market will tend to be balanced. With high-quality products and all-round services, The company expects to further expand its turnover in the small household appliance market. From the perspective of technology research and development, the company actively develops the research and development of 55 / 40nm and 12 inch wafer process, so as to open the capacity limit of 8-inch wafer. The first 55nm product of home appliance master MCU has been promoted on the client and continues to develop other 55nm products.
Display driver chip: AMOLED has a broad market space in China, and entering the brand market brings new impetus. AMOLED sales grew several times year-on-year. Previously, the company mainly focused on the maintenance market. Now it is exploring brand customers and opening up new growth space. AMOLED display driver chip FHD + mobile phone screen new products have been mass produced and adopted by many panel factories. At the same time, wearable products have also entered the brand market. The main competitive barrier of AMOLED screen lies in the algorithm of various screen bodies, and the main manufacturing process level has entered 55 / 40 / 28nm. The company's AMOLED products are mainly aimed at China's AMOLED screen factory. The market is mainly dominated by Korean and Taiwan manufacturers. It has the characteristics of large volume of single products and low gross profit margin. The company has its own core technology and IP self-development, has low cost advantages, and can provide fast services for Chinese customers. AMOLED display screen has gradually become the mainstream of mobile phones. Chinese mobile phone brands have increased the proportion of domestic screens. Many 6th generation line flexible screen factories in China are also landing one after another. The growth trend of domestic AMOLED screen market is clear, and the company's products will enjoy the growth dividend of Chinese market.
Investment suggestion: the company is the absolute leader of home appliance MCU in mainland China. The 8-bit MCU ecology is completely self-made, and there is still more than 20% room to improve the share of household appliances. Expand the layout of vehicle regulation MCU into high-end applications. AMOLED drive and power management have been laid out for many years, and enter brand customers to open growth space. Looking at vehicle regulation MCU for a long time, AMOLED drive and power management will enter the automotive market. At present, the supply of products is in short supply, and the layout of production capacity ensures growth. It is estimated that the net profit in 2022, 2023 and 2024 will be RMB 530, 7.6 and 1.07 billion respectively, corresponding to 35 / 25 / 18 times of PE, maintaining the "buy" rating.
Risk warning event: the risk that downstream demand is less than expected and capacity supply is less than expected
