\u3000\u3 Bohai Water Industry Co.Ltd(000605) 358 Hangzhou Lion Electronics Co.Ltd(605358) )
Event:
The company released the first quarterly report of 2022, realizing an operating revenue of 756 million yuan, a year-on-year increase of 63.86%; The net profit attributable to the parent company was 238 million yuan, a year-on-year increase of 214.02%; The net profit attributable to the parent company after non deduction was 234 million yuan, a year-on-year increase of 253.16%, and the performance was basically in line with expectations.
Comments:
The market demand is strong, the production and sales of the company are booming, the production capacity climbs smoothly, and the profit is greatly improved
Benefiting from the continuous improvement of the industry and market scene, strong market demand, the release of the company’s product capacity, the continuous increase of sales orders, and the performance increased significantly by 63.86% year-on-year. The company’s new capacity climbed smoothly and its profitability improved greatly. The gross profit margin of 2022q1 was 50.26%, an increase of 9.29pct year-on-year; The net interest rate was 32.85%, with a year-on-year increase of 15.56pct.
The prosperity of power semiconductor and silicon wafer industries is not decreasing, and the company will continue to benefit from the demand for domestic substitutes
The application demand of power semiconductor in automobile, new energy and other fields is growing rapidly. Yole predicts that the power semiconductor device market will increase from US $17.5 billion in 2020 to US $26 billion in 2026, with CAGR reaching 6.9%. In addition, at the end of 2021, 19 high-capacity wafer factories in the world entered the construction period, and another 10 wafer factories will start construction in 2022. At present, overseas leading enterprises are cautious about expanding silicon wafer production. It is expected that the 12 inch silicon wafer market will continue to be in short supply in 2022. In China, Huahong, China Resources Microelectronics Limited(688396) , Hangzhou Silan Microelectronics Co.Ltd(600460) and other power plants continue to expand production, and the corresponding demand for heavily doped silicon wafers is strong. China’s leading silicon wafer manufacturers such as Hangzhou Lion Electronics Co.Ltd(605358) will deeply benefit from the domestic substitution demand.
Profit forecast and investment suggestions
Taking into account the rising pattern of both volume and price under the high climate of the industry, we adjusted the company’s performance forecast. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 1.006, 1.415 and 1.735 billion yuan, with a three-year CAGR of 42.46%, corresponding to 38x, 27x and 22x PE. The company will be given a 22-year 60xpe, corresponding to the target price of 131.96 yuan, and maintain the “buy” rating.
Risk tips
Cyclical fluctuations in the semiconductor industry; Technical iteration is not as expected; The ramp up of production capacity is less than expected.
