\u3000\u3 Bohai Water Industry Co.Ltd(000605) 111 Wuxi Nce Power Co.Ltd(605111) )
Events
Wuxi Nce Power Co.Ltd(605111) released the performance report for the first quarter of 2022: the company achieved an operating revenue of 421 million yuan in the first quarter of 2022, with a year-on-year increase of 30.79%, a net profit attributable to the parent company of 112 million yuan, with a year-on-year increase of 50.11%, and a net profit attributable to the parent company of 110 million yuan after deduction of non equity incentive fees (190797 million yuan after deduction of equity incentive fees), with a year-on-year increase of 48.29%.
Key investment points
In the first quarter of 2022, the profit increased sharply, and the profitability increased significantly year-on-year
In the first quarter of 2022, the company’s single quarter net profit increased by 50.11% year-on-year, and the single quarter gross profit margin reached 39.72% (year-on-year + 18.91pct). In terms of period expenses, the company’s period expenses increased. In the first quarter of 2022, the expense rate (excluding R & D) was 4.41% (year-on-year + 3.0pct), of which the sales expense rate was 1.92% (year-on-year + 0.7pct), the management expense rate was 3.33% (year-on-year + 2.10pct), and the R & D expense rate was 4.09% (year-on-year + 0.1pct). Affected by the rise of emerging application fields such as automotive electronics (including fuel vehicles and new energy vehicles), photovoltaic inverter and photovoltaic energy storage, as well as the accelerated localization of electronic components and the continuation of the epidemic, the prosperity of the power semiconductor industry continues to rise. Focusing on market demand, customer demand and industry development trend, the company actively carries out R & D upgrading and product technology iteration; Continuously develop and maintain supply chain resources and strive for more capacity support; Optimize the market structure, customer structure and product structure, explore emerging markets and develop key customers (including but not limited to automotive electronics, photovoltaic inverter and photovoltaic energy storage, charging pile, high-end industrial control, high-end electric tools, 5g base station power supply, lithium battery protection, plant protection UAV, plant lighting, Siasun Robot&Automation Co.Ltd(300024) and other fields), and finally achieve better growth in business scale and economic benefits.
Strengthen production capacity guarantee, automobile and photovoltaic are the main line of long-term growth
In terms of production capacity, the company has established a long-term strategic cooperative relationship with Huahong Hongli, and has been put into operation in Huahong Hongli plant 1, plant 2, plant 3 and plant 7. At present, the company has become one of the semiconductor power device design companies with the largest chip investment in China’s 8-inch and 12 inch chip process platform, and the overall production capacity continues to grow. In addition, in 2021, the company has carried out risk batch verification of products in an overseas chip foundry, invested the first engineering batch in a domestic chip foundry, and continuously developed chip foundry suppliers as a supplement to production capacity.
Automobile and photovoltaic business will be the main line of the company’s long-term growth. In 2021, the company focused on introducing Byd Company Limited(002594) , and has realized the mass supply of more than a dozen products. At the same time, the company’s products have also entered the whole machine parts factories of several automobile brands, and the sales proportion of automobile electronic products has increased rapidly; At the same time, the company seizes the fast-growing market demand of new energy carbon peak and carbon neutral, and focuses on the photovoltaic inverter and photovoltaic energy storage market. IGBT and MOSFET products have been sold in large quantities in China’s leading enterprises. The photovoltaic inverter and photovoltaic energy storage field will become an important performance growth point of the company in 2022.
Increase the number of card positions and lay the foundation for the future growth of the core track
The company plans to issue non-public shares, and plans to raise a total of no more than 1.418 billion yuan for the third generation semiconductor SiC / GaN power device and sealing test project (200 million yuan), power drive IC and intelligent power module project (600 million yuan), SiC / IGBT / MOSFET and other power integration module (including vehicle specification level) project (500 million yuan) and supplementary working capital (150 million yuan).
R & D and industrialization of the third generation semiconductor SiC / GaN power devices and packaging test: the construction period is 24 months. It is expected that the yield will be 40% in the first year, 80% in the second year and the designed production capacity from the third year after the construction is put into operation as planned and put into operation on schedule. The internal rate of return (after tax) of the project is 18.96%, and the investment payback period (including the construction period after tax) is 6.32 years.
R & D and industrialization of power driven IC and intelligent power module (IPM): the construction period is 36 months. It is expected that the production rate will be 40% in the first year, 80% in the second year and the designed production capacity from the third year after it is put into construction as planned and put into operation on schedule. The internal rate of return (after tax) of the project is 18.08%, and the investment payback period (including the construction period after tax) is 6.41 years.
R & D and industrialization of SiC / IGBT / MOSFET and other power integration modules (including vehicle specification level): the construction period is 36 months. It is expected that the production rate will be 40% in the first year, 80% in the second year and the design production capacity from the third year. The internal rate of return (after tax) of the project is 14.38%, and the investment payback period (including the construction period after tax) is 7.85 years.
Profit forecast
Regardless of the impact of additional issuance, it is predicted that the company’s revenue from 2022 to 2024 will be RMB 2.080 billion, RMB 2.697 billion and RMB 3.206 billion respectively, and EPS will be RMB 378, RMB 4.88 and RMB 5.82 respectively. At present, the corresponding PE of the stock price is 35, 27 and 23 times respectively, maintaining the “recommended” investment rating.
Risk tips
The downside risk of industry prosperity, the risk that the progress of raised investment projects is less than expected, the risk that the progress of additional issuance is less than expected, the risk that the progress of product R & D is less than expected, the risk of intensified industry competition, the risk of changes in overseas policies, etc.
