\u3000\u3 Guocheng Mining Co.Ltd(000688) 521 Verisilicon Microelectronics (Shanghai) Co.Ltd(688521) )
Key investment points
Performance summary: in 2021], the company achieved an operating revenue of 2.14 billion yuan, a year-on-year increase of 42.0%; The net profit attributable to the parent company was 10 million yuan, turning losses into profits compared with last year.
The revenue has increased significantly, and the performance will turn around in 2021. According to the data of 2021: 1) on the revenue side, the company achieved an operating revenue of 2.14 billion yuan, a significant year-on-year increase of 42.0%. 2) From the profit side, the company realized a net profit attributable to the parent company of RMB 10 million this year, which turned around the loss compared with the same period last year. Among them, the company’s gross profit margin was 40.1%, a slight increase of 0.6pp year-on-year; The net interest rate was 0.6%, up 2.3pp year-on-year. 3) On the expense side, the company’s sales expense ratio was 6.0%, a year-on-year decrease of 0.2pp; The rate of administrative expenses was 4.1%, a year-on-year decrease of 1.6pp; The rate of R & D expenses was 29.4%, a year-on-year decrease of 5.9pp. 3) In terms of orders in hand, the company signed 2.96 billion yuan of new orders in 2021, a significant increase of 62% year-on-year, and the performance certainty was further improved.
The scale effect of R & D appeared, and the per capita output increased steadily. In 2021, the company’s R & D investment accounted for 32.3% of its revenue. Driven by the scale effect, it decreased by 8.9pp compared with the same period last year. The per capita output of the company’s R & D personnel reached 1.914 million yuan, a year-on-year increase of 21.6%, and the output of R & D personnel increased steadily.
The company has abundant IP reserves and its business continues to grow. In terms of specific business segments, the company’s intellectual property royalty contribution revenue was 610 million yuan, with a year-on-year increase of 21.0%, of which the number of IP authorizations in 2021 reached 228, an increase of 94 compared with 2020. The company has rich IP reserves. At present, it has covered NPU, GPU, Vpu, DSP and other fields. Downstream applications include wearable devices, Internet of things, tablet phones, automotive electronics and so on. With the advancement of advanced manufacturing process and the complexity of chip functions, the geometric level of chip design difficulty increases. The self-developed IP authorization mode of Xinyuan will greatly reduce the design cost and R & D risk of fabless enterprises. We expect that with the rise of local fabless enterprises, the company will have strong growth momentum in the future.
Chip customization R & D strength is strong, and the 5nm design project has been completed. The company’s chip design business achieved a revenue of 550 million yuan, a significant increase of 104.5% year-on-year; The chip mass production business achieved a revenue of 890 million yuan, a year-on-year increase of 35.4%. In terms of revenue structure, advanced process is the focus of the company’s design projects, with revenue of 7Nm and below accounting for nearly 50% and revenue of 14nm and below accounting for more than 70%. In addition, the company’s 5nm design project has been completed, indicating that the company’s chip design strength in the field of advanced process is in the leading position in China.
Profit forecast and investment suggestions: we raised the company’s EPS from 2022 to 2024 to 0.34 yuan, 0.66 yuan and 0.86 yuan, and the compound growth rate of revenue in the next three years is expected to reach 27.8%. We continue to be optimistic about the company’s advantages in the field of IP licensing and chip design in China and maintain the “buy” rating.
Risk tip: IP R & D is less than expected, the downstream demand of the industry is down, and the downstream capacity is less than expected.
