\u3000\u3 Guocheng Mining Co.Ltd(000688) 385 Shanghai Fudan Microelectronics Group Co.Ltd(688385) )
Events
On March 31, the company released the forecast of the first quarterly report of 2022. It is estimated that the revenue of 2022q1 will reach 750820 million yuan, with a year-on-year increase of 49% – 63% and a month on month increase of 1% – 10%; The net profit attributable to the parent company was RMB 195250 million, with a year-on-year increase of 126% – 189%, deducting the net profit not attributable to the parent company of RMB 190245 million, with a year-on-year increase of 167% – 244%.
Business analysis
We expect the company’s high gross profit margin in 2022q1 to continue, and the net profit margin in Q1 is expected to be 24% – 33%, with a seasonal decrease in R & D expenses. In 2021, the company’s various products continued to be in short supply and prices increased in varying degrees. From the gross profit margin of each business segment at the end of 2021, the gross profit margin of security identification IC / memory / MCU / FPGA increased by 17pct / 10PCT / 23pct / 3PCT respectively compared with 2020. Q1 company’s amortization of share based payment expenses due to the implementation of restricted stock incentive plan is about 37 million yuan. According to the announcement of equity incentive, the share based payment expenses in 202224 are 150 million yuan, 78 million yuan and 42 million yuan respectively. At the same time, due to the rhythm of annual R & D promotion, R & D projects in the first quarter have less expenses except salary, which will be improved in the next few quarters. In 2021, the R & D expense ratio is 27% and the net interest rate is 22%. The seasonal fluctuation of R & D expense will have a great impact on the net profit.
In terms of business segments: 1) the company takes the lead in FPGA technology in China. In 2021, the revenue of FPGA and other chips was 430 million yuan, with a year-on-year increase of 109%. The company is actively developing a new generation of 1 billion gate level products based on 14 / 16nm process, and further enriching the types of FPGA and PSoC chips based on 28nm process, so as to expand new markets and maintain the company’s leading position in domestic FPGA technology. 2) The company’s MCU business achieved downstream application expansion, with a revenue of 300 million yuan, a year-on-year increase of 64%. In industrial control, smart home, automotive electronics and other fields, the proportion of general low-power MCU has gradually increased. In addition, LG series MCU of the company has successfully obtained aec-q100 certification and entered the field of vehicle use. 3) The company’s security and identification chips and nonvolatile memory increased both in volume and price, with revenue increasing by 42%, and a variety of products passed vehicle regulation certification. Smart cards, security chips and smart identification device chips have steadily expanded to new areas of the Internet of things. At the same time, some products have obtained vehicle regulation certification. Nonvolatile memory product line has also successfully entered mass production in the field of automotive electronics.
Profit adjustment and investment suggestions
It is estimated that the company’s revenue in 202224 will be 3.5/4/5.3 billion yuan, up 4% / 7% / 9%, with a year-on-year increase of 35% / 27% / 19%. The net profit attributable to the parent company is predicted to be 7.8/9.5/1.16 billion yuan, up 9% / 3% / 3%, with a year-on-year increase of 51% / 23% / 22%. The corresponding PE is 47 / 39 / 32 times. The net profit attributable to the parent company after adding back the share payment fee is 9.3/10.3/12, with a year-on-year increase of 77% / 11% / 17%. Give PE 60 times in 22 years, target price 57 yuan, and maintain the “buy” rating.
Risk tips
FPGA market demand is less than expected; Memory cyclical risk; Safety and identification chip gross margin decline risk; Wafer capacity support is less than expected risk.
