\u3000\u3 Shengda Resources Co.Ltd(000603) 501 Will Semiconductor Co.Ltd.Shanghai(603501) )
Core view
The platform showed its synergy advantages and significantly improved its profitability. In 2021, the company achieved a revenue of 24.1 billion yuan (YoY 21.6%), a net profit attributable to the parent company of 4.48 billion yuan (YoY 65.4%), and a net profit not attributable to the parent company of 4 billion yuan (YoY 78.3%). In the fourth quarter, the single quarter revenue was 5.79 billion yuan (YoY – 1.13%, QoQ 1.3%), the net profit attributable to the parent was 990 million yuan (YoY – 2.23%, QoQ – 24.9%), and the net profit not attributable to the parent was 940 million yuan (YoY 41.9%, QoQ – 15.2%). Under the tight global semiconductor supply and demand environment, the company achieved a significant increase in profitability by virtue of product optimization and upgrading, category expansion and close supply chain cooperation.
Major breakthroughs were made in cis diversification and display touch business, and diversified development offset the fluctuations in the single market. In 2021, the company’s chip design business achieved a revenue of 20.38 billion yuan (YoY 18.0%) and a gross profit margin of 37.9% (YoY + 6.15pct). Among them, the revenue of CIS business was 16.26 billion yuan (YoY 10.7%), and mobile phone, automobile and security accounted for 57%, 14% and 18% respectively. The rapid growth of automobile, security, medical treatment, laptop, arvr and IOT markets combined with the continuous optimization of mobile phone product structure promoted the gross profit margin by 2.27pct to 33.64%. The continuous mass production of a number of new tddi products in front-line mobile phone brand customers promoted the upgrading of tddi business product structure, realizing a revenue of 1.96 billion yuan (YoY 163.9%) and a gross profit margin of 60.9% (YoY + 36.9pct). Analog and other chip design business and semiconductor distribution business also benefited from the extensive layout of ecological partners and close supply chain relationship, and achieved significant growth in performance under the tight supply and demand pattern of the industry.
The “3 + n” strategic layout continues to deepen, laying the foundation for the long-term growth of platform design companies. Based on CIS, display touch and simulation solutions, the company incubates new businesses such as MCU, LCOS and SerDes according to its own IP accumulation, customer demand and supply chain coordination. The deepening of “3 + n” layout is expected to lay the foundation for long-term sustainable development. The company invested 2.62 billion yuan (YoY 24.8%) in R & D throughout the year, accounting for 12.9% of the design business revenue. The company successively launched different pixel models of mobile phone CIS of 50mp, 60mp and 100mp, and achieved a breakthrough in 0.56um pixel, which is expected to promote the upgrading of mobile phone CIS product structure; The car CIS is fully distributed with ADAS, look around, side view, rear view and in cabin application, and the fixed-point share of foreign car manufacturers in China continues to increase; New products of FHD and HD tddi are fully introduced into Tier1 OEM for mass production. AMOLED DDIC is expected to be mass produced in 2022. In the future, medium and large-size DDIC tracks will be laid out to improve the product lines of automobile and other markets.
Investment suggestion: product upgrading is superimposed with diversified chip design companies to maintain the “buy” rating. At present, the impact of repeated epidemics on consumer electronics demand is uncertain. Based on the principle of prudence, the company adjusted the company’s revenue in 22-24 years to 32.15, 38.71 and 46.61 billion yuan (36.20 and 42.29 billion yuan before 22-23 years), the net profit attributable to the parent company to 5.84, 7.30 and 9.09 billion yuan (6.19 and 7.56 billion yuan before 22-23 years), EPS to 667, 8.34 RMB 10.38 (the value was 7.12 and 8.70 22-23 years ago). The current share price corresponds to 24.7, 19.7 and 15.8 times PE from 2022 to 2024, maintaining the “buy” rating.
Risk warning: the demand is less than expected; Chip manufacturing capacity is lower than expected; New products are not as expected.
