\u3000\u3 Shengda Resources Co.Ltd(000603) 986 Gigadevice Semiconductor (Beijing) Inc(603986) )
Events
Gigadevice Semiconductor (Beijing) Inc(603986) released the performance forecast for the first quarter of 2022: it is estimated that Q1 company will realize the net profit attributable to the parent company of about 681 million yuan in 2022, with a year-on-year increase of about 126.12%, and the net profit attributable to the parent company after deduction of Non Profits of about 650 million yuan, with a year-on-year increase of 134.84%.
Key investment points
Q1’s performance is strong, and 2022 has achieved a good start
In 2022, the net profit attributable to the parent company in Q1 was basically the same as that in Q4. The company’s memory, MCU and other products continued to be in short supply, and related businesses maintained rapid growth. At the same time, on the basis of deepening the existing market and customers, continue to explore new markets, actively develop new customers, and strive to improve the performance contribution of industries and other fields. In addition, in terms of supply chain management, the company made efficient use of production capacity resources, alleviated the pressure of structural supply, overcome the impact of the epidemic, and achieved a good start in 2022.
China’s storage leader, nor + NAND fully enters the application of vehicle regulations
1) flash service:
Norflash occupies the third place in the world, is the absolute leader in China, and has the leading technical ability in the industry. The demand for products related to the Internet of things, TWS Bluetooth headset, AMOLED, tddi and other mobile phone screens drives the growth of norflash market. According to the data of cinnorresearch, the market scale is expected to grow to $3.7 billion in 2022. The automotive sector will become an important growth point in the future storage market. According to IHS data, the global automotive storage IC market will be US $3.6 billion in 2019 and is expected to grow to US $8.3 billion by 2025. The 2G high-capacity products of GD55 of the company have passed the aecq-100 certification of vehicle specifications, the 2mb-2gb capacity of spinorflash vehicle specification products has been fully paved, and the whole series of gd25 vehicle specification storage products have been adopted in batches in many automobile enterprises. In February 2022, the company announced that its 38nm spinandflash-gd5f series (covering 1gb-4gb capacity) produced nationwide had passed aecq100 vehicle regulation certification. So far, in the field of flash memory, the company has realized the comprehensive layout from spinorflash to spinandflash vehicle specification products.
2) DRAM service:
The company’s niche DRAM is in the lead in China. In June 2021, it mass produced the first self owned brand 19nm4gbddr4 product for niche market, which has passed the certification of many mainstream platforms in the field of consumer applications. At present, 17nm DDR3 products are actively being developed, and there is strong demand in downstream IPTV, security, automotive applications and other markets. According to trendforce data, the global niche DRAM market is expected to reach US $18.465 billion in 2023. At the same time, the company cooperates closely with Changxin storage to provide stable production capacity guarantee for the company’s DRAM products. In the future, DRAM products will become a new revenue contribution point of the company.
32-bit MCU leader, low power consumption and high performance, cutting into the Internet of things + vehicle
The company has ranked first among local manufacturers in China’s 32-bit MCU market for seven consecutive years. With a total shipment of more than 1 billion pieces, more than 20000 customers and more than 450 product choices in 35 series, the broad application coverage provided by the company ranks first in China, and continues to improve the global market share with its overseas service network.
The industry is the first to launch a series of low-power MCU products with the latest armcortex-m23 core, more advanced architecture, better energy efficiency and more cost-effective. According to the data of markets and markets, the global low-power MCU market is expected to grow at a CAGR of 10.3% from 2022 to 2027, and the market size will reach US $7.9 billion in 2027.
Join hands with global IOT development platform service provider graffiti intelligence to carry out cooperation in the application field of wireless intelligent Internet of things. In the future, more innovative solutions will be provided based on the company’s gd32mcu product family, smart home, smart building, smart hotel, industrial Internet of things and other application scenarios.
Steadily entering the vehicle specification market, the first vehicle specification grade MCU product has been released, and it is expected to achieve mass production in 2022. According to icinsights data, it is estimated that the sales of automobile MCU will soar by 23% to reach US $7.6 billion in 2021, then the sales of automobile MCU will increase by 14% in 2022 and 16% in 2023, and the demand will continue to be strong.
We believe that the company’s Flash + DRAM + MCU businesses have strong long-term growth drivers, and the company is expected to achieve three arrows at the same time under the era of domestic substitution, with a clear long-term growth path.
Profit forecast
It is predicted that the company’s revenue from 2021 to 2023 will be RMB 8.510 billion, RMB 13.299 billion and RMB 16.321 billion respectively, and the EPS will be RMB 3.51, RMB 4.90 and RMB 6.11 respectively. The corresponding PE of the current stock price will be 37, 27 and 21 times respectively, maintaining the “recommended” investment rating.
Risk tips
Downside risks of industry prosperity, lower than expected progress of capacity climbing, increased industry competition, changes in overseas policies, etc.
