\u3000\u3 Guocheng Mining Co.Ltd(000688) 099 Amlogic (Shanghai) Co.Ltd(688099) )
Core view
The profitability has increased significantly year-on-year, and 2q22 is expected to maintain sustained and rapid growth. 1q22 company achieved a revenue of 1.481 billion yuan (yoy74.5%, qoq-4.1%), a net profit attributable to the parent company of 270 million yuan (yoy606.7%, qoq-12.7%), and a net profit not attributable to the parent company of 257 million yuan (yoy742.7%, qoq-9.6%), of which the impact of share based payment expenses on the net profit attributable to the parent company was 49.318 million yuan. The substantial year-on-year growth in performance is mainly due to: 1) the steady year-on-year growth in the shipment of 1q22 chips, which further consolidated and improved the company’s market position; 2) 1q21’s profitability is low. Affected by the scale effect and active sales strategy, the profitability of 1q22 has been greatly improved. The company expects 2q22 performance to continue to grow rapidly, mainly due to the strong market demand for the company’s intelligent products and the positive results of new product introduction.
Despite the traditional off-season and rising wafer manufacturing costs, the gross profit margin increased by 7.37pct year-on-year. 1q22’s gross profit margin is 40.8% (YoY + 7.37pct, qoq-3.73pct), which is basically the same as 40.0% in 2021. According to the cycle characteristics of the industry in which the company is located, the first quarter is often the off-season of the whole year. Combined with the significant increase in the quotation of the main wafer foundry of 4q21, the gross profit margin can still maintain a high level, which confirms the strong demand of the downstream for smart set-top box SOC, aiot chip, wireless connection chip and other subdivided fields, as well as the fruitful technology and product advantages and strategies accumulated by the company for a long time. During 1q22, the expense rate was 22.08% (yoy-1.22pct, qoq-1.14pct). The scale effect of the increase of revenue promoted the reasonable decrease of expense rate.
The R & D of each product line is promoted in coordination, which is expected to achieve sustainable growth in the aiot innovation cycle. The company’s s s series has achieved a breakthrough from 28nm to 12NM, leading the industry, and has been adopted by ZTE, Skyworth, Xiaomi, Alibaba, Google, Amazon, etc. the terminal products have been widely used in the equipment of Chinese and overseas operators; AI series SOC chips adopt the industry-leading 12NM process and are adopted by major customers at home and abroad such as Xiaomi, TCL, Alibaba, Google, Amazon and SONOS. The application field of AI series SOC chips is expected to be further expanded; After mass production of w155s1, the company continued to accelerate the research and development of the next generation WiFi Bluetooth chip; V series vehicle mounted chips further expanded their technology and obtained orders from overseas vehicle manufacturers; The 6nm chip is progressing smoothly. Investment suggestion: China’s leading SoC design company of multimedia intelligent terminal maintains the “buy” rating. We expect the company’s revenue to increase by 41.9%, 29.3% and 25.2% year-on-year to 67.8, 8.77 and 10.98 billion yuan in 22-24 years, and the net profit attributable to the parent company to increase by 55.1%, 33.0% and 28.8% year-on-year to 1.26, 1.68 and 2.16 billion yuan. The current stock price corresponds to 32.9, 24.7 and 19.2 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.
