\u3000\u3 Bohai Water Industry Co.Ltd(000605) 111 Wuxi Nce Power Co.Ltd(605111) )
[key points of investment]
In 2022q1, the company’s revenue and net profit attributable to the parent company increased by 31% and 50% respectively year-on-year. The company released the first quarterly report of 2022. The company achieved a revenue of 420 million yuan, a year-on-year increase of 30.8%, a net profit attributable to the parent company of 110 million yuan, a year-on-year increase of 50.1%, a gross profit margin of 39.7%, a year-on-year increase of 6.3pct, a year-on-year improvement of 26.7%, and a year-on-year improvement of 3.4pct, which is at the upper limit of the announcement of performance pre increase.
In 2022q1, the company achieved positive revenue growth month on month and improved profitability. In 2022q1, the company’s revenue achieved a positive growth of 5.4% month on month, mainly due to the shortage of products and the further expansion of sales scale. The gross profit margin of 2022q1 company is basically the same as that of 2021q4. We believe that the demand of power semiconductor industry is still good and the profitability of the company remains stable. In 2021q1, the net profit attributable to the parent company increased by 12.7% month on month, and the net profit attributable to the parent company increased by 1.7pct month on month, mainly because the R & D expense ratio decreased by 3.4pct to 4.0% month on month.
The product technology continues to iterate, and the optimization of customer structure has achieved remarkable results. The company has increased its R & D investment. In 2021, the company added 9 authorized patents, 29 applied patents and nearly 300 new products. With the efficient operation of the company’s product platforms, we expect the company’s product technology to continue to iterate in 2022. In the third generation semi-power semiconductor platform, the development of sicmos platform for 1200V new energy vehicles was carried out smoothly in 2021. The first streamer verification of 1200V SiC MOSFET and 650V e-mode GaN HEMT was completed. Some new products can reach the advanced level in China. The verification of comprehensive characteristics and reliability of products is still in the verification and evaluation stage. In addition, the company will optimize the customer structure and focus on the photovoltaic inverter and energy storage market, which may become a new growth point in 2022.
Actively coordinate production capacity and ensure stable supply. The company’s chip OEM suppliers include Huahong Hongli and China Resources Shanghua. The company has established a long-term strategic cooperative relationship with Huahong Hongli. It has been put into operation in plant 1, plant 2, plant 3 and plant 7. It has become one of the semiconductor power device design companies with the largest chip investment of 8-inch and 12 inch chip process platform in China, and the overall OEM capacity continues to grow. In 2021, the company carried out risk batch verification of products with an overseas chip foundry. A domestic chip foundry invested in the first project batch and continuously developed chip foundry suppliers to ensure stable supply of production capacity.
[investment suggestions]
The company focuses on the R & D and sales of power semiconductor power devices. Due to the pressure on some downstream consumer electronics, we expect the company’s revenue to be RMB 2.02/26.3/33.4 billion from 2022 to 2024, the net profit attributable to the parent company to be RMB 4.9/6.0/750 million, EPS to be RMB 3.41/4.21/5.26, and the PE corresponding to the current stock price to be 38.31/31.01/24.83 times, giving the company a “overweight” rating.
[risk tips]
The industry competition intensifies, the prosperity of power semiconductors decreases, and the expansion of production capacity is less than expected.
