\u3000\u3 Guocheng Mining Co.Ltd(000688) 521 Verisilicon Microelectronics (Shanghai) Co.Ltd(688521) )
Core view
The whole year of 2021 turned losses into profits, and the single quarter profit was positive for the third consecutive quarter. In 2021, the annual revenue was 2.139 billion yuan (yoy42.0%), the net profit attributable to the parent company was 13 million yuan (yoy152.0%), and the net profit not attributable to the parent company was – 47 million yuan (yoy56.1%). Among them, 4q21 had a revenue of 618 million yuan (YoY 38.9%, qoq-4.6%), a net profit attributable to the parent company of 35 million yuan (yoy-41.5%, QoQ 45.8%), and a net profit not attributable to the parent company of 18 million yuan (yoy-15.3%, qoq28.6%), making a single quarter profit for the third consecutive quarter. It was mainly due to the significant growth of the company’s business lines and the scale effect of high revenue growth, which led to a reasonable decline in the R & D expense rate, which was in line with our expectations for the establishment of the inflection point of the company’s long-term profit.
Semiconductor IP authorization business: the number of authorizations has increased significantly, and the IP product line has been further enriched. The number of semiconductor IP intellectual property rights authorized in the whole year reached 228 (134 in 2020), and the royalty income was 610 million yuan (yoy21.00%), and the royalty income was 96 million yuan (yoy19.63%). The company added 40 semiconductor IP authorized customers, with a total number of more than 340 customers. The company has added a new category of display processor IP, which supports mainstream HDR format, VGA to 8K display resolution and multi display drivers, further enriching the company’s previous more than 1400 digital analog hybrid and RF IP product lines with GPU, NPU and ISP as the core.
One stop chip customization service business: advanced design business technology and full orders for mass production business. The company’s chip design business / mass production business revenue was 548 / 885 million yuan (yoy104.5% / 35.4%), the number of new customers was about 15, and the cumulative total number of customers exceeded 290. Among them, nearly 50% of the revenue from chip design business comes from process nodes of 7Nm and below, and more than 70% from nodes of 14nm and below. The number of above-mentioned process projects accounts for 5.6% and 27.8%, indicating that the revenue generating capacity of advanced process chip design business is strong; In the whole year, there were 112 chip projects to be mass produced and shipped, 45 projects to be mass produced, and the order to ship ratio was 1.53 times, indicating the potential for continuous growth of the business.
R & D investment continues to increase and actively layout chiplet and other forward-looking fields. In 2021, the company’s R & D personnel reached 1118, an increase of 161 over 2020. The annual R & D investment was 690 million yuan (yoy11.21%), including R & D cost of 628 million yuan (yoy18.4%). Strategic R & D projects such as data center video transcoding platform, high-end application processor platform and TWS Bluetooth connection platform are progressing smoothly. The company plans to promote the iterative R & D of chiplet scheme from 2022 to 2023 on the basis of the previous stage of R & D.
Investment suggestion: continue to be optimistic about China’s semiconductor IP and chip customization leader, and maintain the “buy” rating. We are optimistic about the growth prospect of the company’s semiconductor IP and chip customization service business in the period of rapid development of China’s chip design industry. It is estimated that the operating revenue from 2022 to 2024 will be 2.84 billion yuan, 3.61 billion yuan and 4.47 billion yuan, and the net profit attributable to the parent company will be 165 million yuan, 286 million yuan and 417 million yuan, corresponding to 8.49, 6.66 and 5.39 times of PS and 145.76, 84.16 and 57.69 times of PE from 2022 to 2024, maintaining the “buy” rating.
Risk warning: the demand is less than expected; Chip manufacturing capacity is lower than expected; R & D is not as expected.
