\u3000\u3 Shengda Resources Co.Ltd(000603) 501 Will Semiconductor Co.Ltd.Shanghai(603501) )
Core view
1q22 is subject to the decline of mobile phone sales and the epidemic, and the net profit attributable to the parent of 2q22 is expected to rebound to a record high. 1q22 achieved a revenue of 5.538 billion yuan (yoy-10.8%, qoq-4.3%), a net profit attributable to its parent company of 896 million yuan (yoy-13.9%, qoq-6.4%), and a net profit not attributable to its parent company of 902 million yuan (yoy-4.5%, qoq-3.5%). The year-on-year decline in performance was mainly due to the decline in smartphone shipments and the impact of a new round of epidemic in China. In addition, fluctuations in the market led to a loss of 65 million yuan from changes in fair value. The company expects that the net profit attributable to the parent company of 2q22 is expected to achieve a month on month growth of no less than 50% (no less than 1.344 billion yuan), a record high, mainly due to the positive adjustment of product structure and the gradual recovery of major market segments.
The gross profit margin in a single quarter increased by 2.88 PCT year-on-year, and the R & D expense rate increased by 1.9 PCT year-on-year. Against the background of rising wafer foundry prices and weak demand in the mobile phone industry, 1q22's gross profit margin maintained a record high of 35.3% (YoY + 2.88pct, qoq-1.2pct), mainly due to the continuous optimization of the company's mobile phone CIS product structure and the smooth diversified layout of non mobile phone products. With the launch and volume of new products of high-end mobile phone CIS, automobile CIS and tddi, we believe that the company's gross profit margin is expected to be further improved. During the 1q22 period, the expense rate was 16.8% (YoY + 2.5%, QoQ + 0.3%), of which the R & D expense rate was 9.4% (YoY + 1.9pct, qoq-0.8pct), and the corresponding R & D expense was 523 million yuan (yoy11.6%, qoq-11.5%). The strengthening of R & D investment was the main factor for the year-on-year increase of the expense rate during the period. 1q22 inventory increased to 10.47 billion yuan (qoq19.2%), mainly for the active management of wafer manufacturing price rise, capacity layout optimization process and demand changes. 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. In 2021, 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; The new products of FHD and hdtddi are fully introduced into tier1oem for mass production. Amoledddic is expected to be mass produced in 2022. In the future, medium and large-size DDIC tracks will be laid out and the product lines of automobile and other markets will be improved.
Investment suggestion: product upgrading is superimposed with diversified chip design companies to maintain the "buy" rating. We expect the company's revenue to be 321.5, 38.71 and 46.61 billion yuan in 22-24 years, the net profit attributable to the parent company to be 5.84, 7.30 and 9.09 billion yuan, and the EPS to be 6.67, 8.34 and 10.38 yuan. The current stock price corresponds to 20.2, 16.1 and 13.0 times PE in 20222024, 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.
