\u3000\u3 Guocheng Mining Co.Ltd(000688) 608 Bestechnic (Shanghai) Co.Ltd(688608) )
Events
On April 14, in 2021, the company achieved a revenue of 1.765 billion yuan, a year-on-year increase of 66.36%, a net profit attributable to the parent of 408 million yuan, a year-on-year increase of 105.51%, deducting 294 million yuan of non attributable net profit, a year-on-year increase of 71.93%.
Commentary
The growth rate of intelligent audio business reached 60%, and the brand market accounted for 64%. In terms of product structure, in 2021, the company’s main Bluetooth audio chip for TWS headphones achieved a revenue of 1.411 billion yuan, a year-on-year increase of 60%, and the revenue proportion remained at 80%. In terms of shipment volume, the shipment volume of Bluetooth audio chips reached 180 million, which is expected to account for about 64% of the market share of brand TWS headphones in 2021 (according to IDC, the shipment volume of Android brand TWS in 2021 was 140 million pairs). The high growth of business and the increase of market share are mainly due to the steady increase of the company’s products with the increase of the proportion of brand TWS. With the performance advantages and the recognition of customers in Huawei, Xiaomi, oppo, vivo and other brands, we expect that the brand of TWS headset market will gradually replace the white brand in the next three years, and the market share of the company is expected to further increase.
The price rise in the upstream supply chain led to a decline in the comprehensive gross profit margin. In 2021, affected by the global “core shortage tide”, the company’s upstream supply chain was tight, resulting in an increase of 62% / 89% in wafer and packaging test costs respectively. In addition, the company’s downstream are large mobile phone, audio and Internet brand customers, which is not easy to transfer costs to the downstream, resulting in a decrease in the comprehensive gross profit margin of 2.76pct. However, we believe that it is unlikely that the gross profit margin will continue to decline in the future, due to: 1) the proportion of smart Bluetooth chips with high gross profit margin is gradually increasing; 2) Some end customers changed from distribution mode to direct sales mode, and the gross profit margin increased by 5 pct; 3) New product launches and product upgrades help maintain ASP.
Continue to increase R & D investment and maintain the first mover advantage of Technology: in 2021, the company’s R & D expenditure was 289 million yuan, a year-on-year increase of 67.51%, and the R & D expenditure rate was 16.38%, the same as that of the previous year. The number of R & D teams increased from 198 at the end of 2020 to 338 at the end of 2021, accounting for 83.05%. With continuous R & D investment, the company continues to take the lead in multi-core heterogeneous embedded SoC technology, dual band broadband low-power WiFi 6 technology, active noise reduction and audio AI technology, and full integrated audio and video storage high-speed interface technology. We believe that the company will maintain a high level of R & D investment in the next few years and continue to consolidate its position in the industry.
Investment advice
It is estimated that the net profit attributable to the parent company in 22-24 years will be 640 / 9 / 1.25 billion yuan, with a year-on-year increase of 57.1% / 40.9% / 38.5%, corresponding to EPS of 5.34/7.52/10.42, and continue to maintain the “buy” rating.
Risk tips
The demand is less than expected; Industry competition intensifies; Price rise of raw materials; Lifting the ban on stocks; Exchange rate risk, etc.
