\u3000\u3 Bohai Water Industry Co.Ltd(000605) 358 Hangzhou Lion Electronics Co.Ltd(605358) )
[matters]
The company issued the announcement of pre increase of performance in the first quarter of 2022. According to the preliminary accounting of the company, the net profit attributable to the parent company is expected to reach 215245 million yuan in the first quarter of 2022, with a year-on-year increase of 183.66% – 223.24%. The non net profit deducted was 212242 million yuan, with a year-on-year increase of 220.50% – 265.85%. During the reporting period, the downstream demand driven by national policies, the accelerated domestic substitution of semiconductors and the rapid development of intelligent economy continued to increase. The market prosperity of the company’s industry segments continued to be high, the market demand was strong, the company’s sales orders were full, and the production and sales of main products increased significantly. The company seized the market opportunity, did a good job in production and operation, optimized the product structure, and improved the company’s core technology R & D capability, The company’s factories continued to increase cost control, the company’s business situation maintained a continuous positive trend, and its profitability improved steadily.
[comments]
The three businesses of semiconductor silicon wafer, semiconductor power devices and compound semiconductor RF chips support each other and consolidate the foundation of leading enterprises in the semiconductor industry. The company has made great progress in the acquisition and expansion of 12 inch semiconductor chip and semiconductor technology, and has made significant progress in the acquisition and expansion of 12 inch semiconductor chip industry. With the advantages of industrial chain integration, the company’s semiconductor power device business has continuously optimized the market, customers and product structure, and rapidly improved grooved Schottky, planar Schottky customized products, photovoltaic products, automotive chips, power chips and other products. The Schottky and MOS chips related to power supply will maintain a state of full production and sales and short supply in 2021. For compound semiconductor RF chip business, the company has formed a large-scale commercial sales and maintained the momentum of rapid volume increase. By the end of 2021, the company has more than 60 high-quality customer groups such as angruiwei and xinbaite.
It is expected to continue to benefit from the high prosperity of the industry and the acceleration of domestic substitution. The World Semiconductor Trade Statistics Association (WSTS) predicts that the global semiconductor market is expected to grow by 8.8% to US $601 billion in 2022. It is expected that all regions and all product categories will continue to grow positively. 5g communication, 5g smart phones, cloud computing, new energy vehicles, Internet of things and other fields continue to drive the demand for semiconductors. According to the requirements of the 14th five year plan, China’s chip self-sufficiency rate will reach 70% by 2025. According to icinsights data, if non mainland companies that set up factories in China are not included in 2021, it will only be about 6%, so there is a huge space for domestic and independent development.
[investment suggestions]
At present, the company is one of the major local silicon wafer manufacturers. In the selection of China’s top ten semiconductor materials enterprises organized by China Semiconductor Industry Association, the subsidiary ranks first for several consecutive years. The company laid out earlier and completed the construction of new production lines of 6-inch, 8-inch and 12 inch silicon wafers, implemented the capacity and technical transformation of power device chip manufacturing production line, and significantly improved the efficiency of production scale. It is expected to directly benefit from the strong demand in the downstream market and the accelerated trend of domestic substitution of semiconductors. It is estimated that the company’s revenue from 2022 to 2024 will be RMB 3.826 billion, 5.119 billion and 6.196 billion respectively, the net profit attributable to the parent company will be RMB 967 million, 1.323 billion and 1.624 billion respectively, and the EPS will be RMB 211, 2.89 and 3.55/share respectively, corresponding to 40, 29 and 24 times of the current PE respectively, which will be rated as “overweight”.
[risk tips]
The production expansion progress is lower than expected
Downstream market demand is lower than expected
