\u3000\u3 Guocheng Mining Co.Ltd(000688) 385 Shanghai Fudan Microelectronics Group Co.Ltd(688385) )
Event: the company released the performance forecast for the first quarter of 2022 on April 1. It is estimated that 22q1 will achieve revenue of 750820 million yuan (median 785 million yuan, yoy + 56.37%, QoQ + 5.3%); The net profit attributable to the parent company is RMB 195250 million (median value: RMB 223 million, yoy + 157.55%, QoQ + 76.25%); The net profit of 190245 million yuan (median 218 million yuan, yoy + 205.49%, QoQ + 100.82%) after non deduction was realized, which greatly exceeded the market expectation. In addition, the amortization of equity incentive expenses of 22q1 company is 369506 million yuan (the annual equity incentive expenses of 22 years are 147 million yuan), and the median return of 22q1 to the parent net profit is 259 million yuan.
The performance of 22q1 was much higher than expected, mainly due to the large volume of high gross profit products and R & D expenses. Compared with the revenue side, the profit side of 22q1 company achieved significant year-on-year growth, mainly due to: (1) the rapid and large-scale volume of high gross profit products brought about the improvement of product structure: the boom of China’s semiconductor industry continued in 22q1, and the downstream application demand was strong. The company continued to strengthen the guarantee of production capacity, which provided a solid foundation for the sustainable growth of business. At the same time, the company actively develops markets and new customers, and the revenue of each product line has increased to varying degrees. Among them, FPGA, PSoC and other products with high gross profit margin continue to increase in volume, resulting in continuous improvement of business structure and gross profit margin. (2) R & D expense side: due to the annual R & D promotion rhythm, the R & D project of 22q1 company has less expenses except salary, resulting in significant improvement in R & D expense rate.
In 2021, the whole product line grew rapidly and its profitability increased significantly Shanghai Fudan Microelectronics Group Co.Ltd(688385) product line covers four categories of products, including security and identification, nonvolatile memory, smart meter chip and FPGA, and provides chip testing services for customers through Hualing Co., Ltd., a holding subsidiary. The company’s products are used in many fields, such as finance, social security, anti-counterfeiting traceability, industrial control, smart meter and highly reliable applications. In 2021, benefiting from the growth of downstream demand and the high outlook of the industry, the company’s product lines achieved rapid growth in revenue and significant increase in gross profit margin. In 2021, the company’s comprehensive gross profit margin reached 58.91% (YoY + 12.95pct). Specifically, in 2021, the company’s security and identification chip business achieved a revenue of 866 million yuan (YoY + 42.19%) and a gross profit margin of 51.07% (YoY + 17.05pct); The revenue of nonvolatile memory is 721 million yuan (YoY + 41.56%), and the gross profit margin is 55.65% (YoY + 10.32pct); The revenue of smart meter chip is 296 million yuan (YoY + 64.18%), and the gross profit margin is 56.60% (YoY + 22.79pct); FPGA and other chips realized a revenue of 427 million yuan (YoY + 109.49%) and a gross profit margin of 84.71% (YoY + 2.61pct).
FPGA and other highly reliable products are fast and large-scale, leading technology and promising. The company is one of the leading companies in the field of FPGA technology in China. At present, it can provide a series of products such as tens of millions of gate level, 100 million gate level FPGA chips and embedded programmable chips (PSoC). The company is the first manufacturer to launch 100 million gate FPGA products in China. In Q2, 2018, the company took the lead in launching 28 nm 100 million gate FPGA products. It was officially sold in 2019, with sales exceeding 100 million yuan in 2020. In 2021, it continued to expand rapidly. By the end of 2021, it had sold relevant FPGA products based on 28 nm to more than 300 customers. At the same time, the company has the first PSoC to be introduced to the market in China. This product can meet the needs of application fields such as high-speed communication, signal processing, image processing and industrial control, and the market response is good. At present, the company is actively developing a new generation of 1 billion gate level products based on 14 / 16nm process, further enriching the types of FPGA and PSoC chips in 28nm process, and maintaining the leading technology of domestic FPGA.
We will continue to pay attention to R & D investment, and automotive electronics will blossom at multiple points. The company adheres to technological innovation and maintains a high level of R & D investment for a long time. In 2021, the company invested 749 million yuan in R & D, accounting for 29.06% of revenue. In addition, the company has blossomed in many aspects in the automotive electronic business. The fm1280 chip of smart card and security chip and the FM17 series reading and writing series of smart device chip have passed aec-q100 certification, making breakthroughs in the fields of automotive Tbox security chip and digital key; Nonvolatile memory has also entered mass production in the field of automotive electronics; In terms of MCU chip, the company released LG series MCU in December 2021, which has obtained aec-q100 certification. The target application fields include vehicle wiper, window, seat, door lock, air conditioner, electronic shifter, etc.
Investment suggestion: considering the better than expected performance of the company’s 22q1, the net profit attributable to the parent company in the year 22 / 23 / 24 was raised to 703 / 905 / 1183 million yuan, and the corresponding current price PE was 61 / 48 / 36 times respectively. The company is a leading large IC design company in China. FPGA and other highly reliable businesses are technologically advanced in China, and are in the stage of rapid growth, maintaining the “recommended” rating.
Risk warning: the risk of downstream market fluctuation; Risk of upstream supply fluctuation; The risk of intensified market competition; The risk that the R & D Progress of new products is less than expected; Risks of attracting talents and maintaining innovation ability.
