\u3000\u3 China Vanke Co.Ltd(000002) 049 Unigroup Guoxin Microelectronics Co.Ltd(002049) )
Event: the company released the annual report of 2021. In 2021, the company’s revenue was 5.342 billion yuan, a year-on-year increase of + 63.35%; The net profit attributable to the parent company was 1.954 billion yuan, a year-on-year increase of + 142.28%; Deduct the net profit not attributable to the parent company of RMB 1.796 billion, a year-on-year increase of + 158.10%. In a single quarter, 2021q4 achieved a revenue of 1.553 billion yuan, a year-on-year increase of + 63.42% and a month on month increase of + 3.69%; The net profit attributable to the parent company was 496 million yuan, with a year-on-year increase of + 307.33% and a month on month increase of – 14.69%; Net profit deducted from non parent company was 437 million yuan, with a year-on-year increase of + 510.42% and a month on month decrease of – 21.52%.
1. Special integrated circuits: in 2021, the revenue of microelectronics in China was 3.365 billion yuan, a year-on-year increase of + 101.11%, and the net profit was 1.831 billion yuan, a year-on-year increase of + 108.74%, accounting for 93.72% of the net profit attributable to the parent company of listed companies, mainly due to the explosion of downstream demand for special integrated circuits. From the perspective of profitability, the net interest rate of special integrated circuits in 2021 was 54.41%, a year-on-year increase of + 1.99pct, and the net interest rate increased significantly under the scale effect.
The company continues to invest heavily in R & D and is expected to build a large platform for domestic special chips in the future. The company’s mainstream digital chip products, such as special microprocessors and supporting chips, special FPGA, special memory, network bus and interface products, all maintain leading advantages in the Chinese market, and the market share of analog chip products, such as power chip, power module and power monitoring products, continues to expand. In addition, the company continued to invest heavily in R & D. in 2021, the R & D expenditure of listed companies was 866 million yuan, a year-on-year increase of + 43.42%, accounting for 16.21% of revenue, driving the continuous expansion of the company’s special chip product line, such as the wide application of special SOPC platform products and the continuous development of system level chips and peripheral matching products. In addition, the company continued to develop digital power supply, high-performance clock, high-speed and high-precision ADC / DAC, protection circuit, isolation chip Some models of new analog chips such as sensor chips have been sold and are expected to become new growth points.
2. Smart security chips: the revenue in 2021 was 1.664 billion yuan, a year-on-year increase of +22.11%. In terms of profitability, the gross profit margin of smart security chips in 2021 was 31.17%, a year-on-year increase of +6.34pct. We believe that it is mainly due to the increase in the proportion of high value-added products (such as higher added values such as nfc-sim, high-capacity SIM, ESIM, etc.) plus the scale effect.
In 2021, the company’s smart security chips will blossom at multiple points: the overseas market share of SIM card chips will continue to increase; China’s market share of bank IC card chips continued to increase, while overseas sales continued to grow; The third generation social security card has made breakthroughs in many projects, and the delivery volume has increased significantly; Digital money chips and solutions are widely used in pilot areas; Several projects in the field of smart three meters (electricity meter, gas meter and water meter) and smart wear have been implemented; The vehicle specification level safety chip scheme has been introduced into many vehicle enterprises and supplied in batches. In addition, the research, development and industrialization of high-end security chips and vehicle controller chips of the convertible bond raised investment project are progressing smoothly, which is expected to become a new growth point of the company.
3. General FPGA: in 2021, the revenue of Ziguang Tongchuang was 782 million yuan, a year-on-year increase of + 147.75%, and the net profit was 41 million yuan, compared with – 261 million yuan in the same period last year. Product application end: in 2021, the company produced and delivered large-scale FPGA, the model pedigree of small and medium-sized FPGA continued to improve, and the delivery increased rapidly in the fields of video image processing, industrial control and consumer market. At the end of product research and development, the research and development of the first generation SOPC series products in 2021 is progressing smoothly. It has multiple sub series product branches such as control operation processing, intelligent operation processing and high-performance computing, providing highly competitive system level solutions for embedded terminals, industrial control, image and video, communication and other fields; And the second generation of SOPC started research and development in the fields of artificial intelligence, machine vision and so on.
Special integrated circuits are still the main source of performance of listed companies. The performance of listed companies increased rapidly in 2021, and the performance of 2022q1 was + 57.54% ~ 69.90% year-on-year, and + 2.74 ~ 10.80% month on month, which reflects the continuous high outlook of China’s special chips. At the same time, as the core card enterprise of China’s special chips, the performance of China microelectronics further verified the high outlook of downstream special equipment. In addition, intelligent security chip and general FPGA have also achieved rapid development.
1. China microelectronics: the leader of domestic special chips, which is the core card enterprise of the high growth subdivision track of special equipment. In the future, it will build a large platform for domestic special chips.
1) rapid growth of special chip industry: China’s special equipment has entered the period of large-scale construction, and the value of equipment informatization has been continuously improved due to the upgrading of mechanization to informatization. In addition, with the localization of special chips, we expect that the scale of China’s special digital chip industry in the 14th five year plan will exceed 40%.
2) high barriers: special chips have strict market access barriers and a development cycle of at least 5-7 years. Therefore, China’s Microelectronic special chips have a high market share in aviation, communication and other sub circuits, and will usher in high growth with high certainty in the future.
3) performance elasticity: as an IC design enterprise, it has high performance elasticity under the effect of scale. From 2017 to 2021, China’s microelectronics revenue grew at a compound growth rate of 60.00% and net profit at a compound growth rate of 73.78%. It is one of the enterprises with the strongest growth momentum in the special equipment sector.
4) continuous product expansion: continuous high R & D investment drives the continuous expansion of product line (such as special SOPC platform products and new analog chips). In the future, the company is expected to build a domestic special chip platform enterprise and benefit from information construction for a long time.
2. Same core micro: the pioneer of national governance digitization, the industrial ecological scale continues to expand, and an increasingly complete brand matrix including safety chip, power management chip, on-board control chip, NFC chip and intelligent identification chip is formed.
1) based on the present: the same core micro has become one of the major security chip suppliers in finance, communication, electronic certificate and other industries. SIM card products: with the withdrawal of overseas competitors and the continuous improvement of product added value promoted by nfc-sim, high-capacity SIM and ESIM, the future performance growth can be expected; Bank card chip: Bank Of China Limited(601988) card growth is driven by the advent of a 10-year card replacement cycle.
2) looking forward to the future: many fields of digital national governance (Internet of things, 5g, cloud computing, big data, vehicle control, payment, etc.) are being laid out, or will become the vanguard of digital national governance.
Placement of high-end chips and on-board controller chips in convertible bond raised investment projects: high-end security chip projects meet the growing demand for security chips in emerging markets such as Internet of things, 5g, cloud computing and big data; The on-board controller chip project aims to realize the independent control of on-board controller chip.
3. Ziguang Tongchuang: a joint-stock subsidiary and a leading FPGA enterprise in China. According to elecfans data, the market scale of China’s general-purpose FPGA was about 10 billion yuan in 2018, but it was mainly supplied by overseas enterprises, and the market share of Chinese manufacturers was only 3%. As the leader of general-purpose FPGA in China, Ziguang Tongchuang has achieved technological breakthrough and mass supply in communication and other fields. In 2021, the delivery in the fields of video image processing, industrial control and consumer market increased rapidly, the research and development of SOPC series products progressed smoothly, and the company has achieved profitability. With its leading position in FPGA in China, we think its value can not be ignored.
Investment suggestion: the future development of the company mainly comes from the high-speed growth of special chips of microelectronics in China, the strategy of one core micro in the field of national governance digitization, and Ziguang Tongchuang. It is a leading enterprise of general FPGA in China. We expect the net profit attributable to the parent company from 2022 to 2024 to be RMB 3.084 billion, 4.203 billion and 5.638 billion respectively, with corresponding valuations of 34x, 25X and 19x, maintaining the “buy” rating.
Risk tip: the debt problem of the group, and the expansion of the application field of special equipment and intelligent security chips are not as expected.
