\u3000\u3 Bohai Water Industry Co.Ltd(000605) 358 Hangzhou Lion Electronics Co.Ltd(605358) )
Events
Hangzhou Lion Electronics Co.Ltd(605358) electronic release of performance forecast for the first quarter of 2022: it is estimated that the net profit attributable to shareholders of Listed Companies in the first quarter of 2022 will be 215 million yuan to 245 million yuan, an increase of 1392055 million yuan to 1692055 million yuan compared with the same period of last year, with a year-on-year increase of 183.66% to 223.24%.
Key investment points
The performance forecast for the first quarter of 2022 exceeded expectations, benefiting from the continued high prosperity of the industry and the acceleration of localization substitution
According to the company’s performance report for the first quarter of 2022, the company’s net profit after deducting non recurring profits and losses attributable to shareholders of Listed Companies in the first quarter of 2022 is RMB 212 million to RMB 242 million, which will increase by RMB 1458534 million to RMB 1758534 million compared with the same period of last year, with a year-on-year increase of 220.50% to 265.85%. The high-speed growth of the company’s performance is mainly due to the support of national policies and the domestic substitution of semiconductors. The market prosperity of the company’s industry segments continues to be high, the market demand is strong, the company’s sales orders are full, the production and sales of main products are greatly improved, and the profitability is steadily improved. According to the company’s annual performance announcement in 2021, the company’s semiconductor silicon wafers achieved a revenue of 1.459 billion, a year-on-year increase of 49.85%, a sales proportion of 58.12%, a gross profit margin of 45.45% (year-on-year + 4.8%), and semiconductor power devices achieved a revenue of 1.007 billion, a year-on-year increase of 100.34%, a sales proportion of 40.12%, and a gross profit margin of 50.95% (year-on-year + 21%). During this period, the company’s debt ratio was 34.39%, a year-on-year decrease of 26.2%, and the company’s operating cash flow was 438 million, a year-on-year increase of 41.15%. The reason for the decrease was that the company improved the product structure, strengthened the cost control, and timely raised the product price, resulting in a significant increase in revenue and a significant improvement in profitability. In addition, in 2021, the company’s R & D expenses were RMB 229.1 million (year-on-year + 104%), and the R & D expenses doubled year by year.
Based on the semiconductor wafer business, the volume and price rise under the condition of capacity shortage + domestic substitution
The company is a leading semiconductor silicon wafer enterprise in China. In terms of production capacity, the company’s semiconductor silicon wafer business has increased significantly. The company’s new production lines of 6-inch, 8-inch and 12 inch silicon wafers have been built and operated at full capacity. By the end of 2021, the company will realize the production capacity of 12 inch silicon wafers with an annual output of 1.8 million wafers, and the efficiency of production scale has been significantly improved; In terms of products, after early customer expansion and product verification, the company’s 12 inch silicon wafer has covered more than 14nm technology node logic circuits, image sensing and power device chips cover all customers’ technology nodes and have been shipped on a large scale. The production and sales of 8-inch silicon wafer have been further expanded and the market share has been further improved; In terms of customers, the company has covered a stable customer base including international well-known multinational companies such as ONSEMI, AOS, Toshiba, Taiwan semiconductor and Taiwan Hanlei, as well as well-known Chinese companies such as Semiconductor Manufacturing International Corporation(688981) , Huahong Hongli, China Resources Microelectronics Limited(688396) electronics, Hangzhou Silan Microelectronics Co.Ltd(600460) and so on. The company acquired Guojing semiconductor. The industrial and commercial changes have been changed and the consolidated statements have been completed at the end of the first quarter. At present, the plant infrastructure of Guojing semiconductor has been fully completed, and the monthly production capacity of 30000 light mixed 12 inch polishing chips has been fully opened. Limited by the long delivery time of the equipment, the company is expected to produce 15 pieces per month in the second half of next year, and the production capacity will reach full capacity. The company’s acquisition of Guojing semiconductor industry has greatly made up for the short board of jinruihong’s 12 inch silicon chip, and accelerated the company’s 12 inch localization and industrialization process.
The expansion of foundry production is in full swing, and the continuous growth of capital expenditure drives the high demand for semiconductor silicon wafers. Semi expects the global semiconductor silicon wafer shipment area to reach 14 billion square inches in 2021, with a year-on-year increase of 13.9%. It is expected that the silicon wafer shipment area will be 14.9 billion square inches in 2022 / 2023 / 2024, with an increase of 6.4% / 4.6% / 2.9% respectively. At the same time, the supply of silicon wafer capacity is tight. Companies in the industry have raised the price of silicon wafer, which is expected to increase by up to 30%. In terms of industry structure, at present, the market monopoly of international giants is obvious. In particular, the localization rate of 12 inch silicon wafer in China is low, the supply is seriously insufficient, and the substitution space is broad. It is expected that under the dual resonance of capacity shortage and domestic substitution, China’s semiconductor silicon wafer industry is expected to usher in a simultaneous rise in volume and price in the future.
Power + RF two wheel drive, the company has significant advantages in the integrated layout of industrial chain
The company’s business extends to semiconductor power devices and compound semiconductor RF chips, creating an integrated industrial chain layout from silicon chips to devices / chips. In terms of power devices, in 2021, the production and sales of the company’s vehicle specification level power device chips and photovoltaic bypass diode control chips increased significantly. The company strengthened its leading position in the photovoltaic market, deeply cultivated the vehicle specification chip business, expanded the field of general power terminals, and comprehensively enhanced the market competitiveness of the company’s semiconductor power device business. According to yole’s data, the power semiconductor device market will grow from US $17.5 billion in 2020 to US $26.2 billion in 2026, with an average annual compound growth rate of 6.9%; In terms of chemical RF chips, the company’s subsidiary Leong Dongxin has built a capacity of 70000 GaAs RF chips per year and realized batch shipment. In addition, the company’s Haining base plans to layout 360000 RF chip products per year in the future. After years of technology accumulation and customer certification, the company’s compound semiconductor RF chip business has developed by leaps and bounds, and developed 0.15 μ M e-mode PHEMT and other processes and products with the characteristics of low cost, high performance, high uniformity and high reliability have successively entered the market. They have become large-scale commercial sales and maintained the momentum of rapid volume increase. They have more than 60 high-quality customer groups, including angruiwei and xinbaite. At the same time, they are continuously carrying out customer sample delivery verification and production and sales climbing. We believe that while the company is based on the semiconductor silicon chip business, it will layout power devices and RF chips to create an integrated competitive advantage in the industrial chain. The concerted efforts of the three businesses are expected to drive the company to achieve sustained and rapid growth.
Profit forecast
It is predicted that the company’s revenue from 2022 to 2024 will be 3.797 billion yuan, 5.170 billion yuan and 6.511 billion yuan respectively, and the EPS will be 2.03, 2.6 and 3.17 yuan respectively. The corresponding PE of the current stock price will be 42, 33 and 27 times respectively, maintaining the “recommended” investment rating.
Risk tips
Downside risk of industry prosperity, risk of product R & D progress falling short of expectations, risk of intensified industry competition, risk of overseas policy changes, etc.
