\u3000\u3 Guocheng Mining Co.Ltd(000688) 556 Qingdao Gaoce Technology Co.Ltd(688556) )
Event: on the evening of April 28, 2022, the company released 2021 annual report and 2022 first quarterly report.
Chip foundry achieved revenue of 110 million yuan for the first time in 2021, and the performance of 2022q1 greatly exceeded the market expectation: the company achieved revenue of 1.57 billion yuan in 2021, a year-on-year increase of + 110%; The net profit attributable to the parent company was 170 million yuan, a year-on-year increase of + 193%; The net profit deducted from non parent company was 170 million yuan, a year-on-year increase of + 303%. Among them, the income of cutting equipment was 980 million yuan, a year-on-year increase of + 74%, accounting for 63%; The revenue of diamond line was 290 million yuan, a year-on-year increase of + 37%, accounting for 19%; The new business of chip OEM realized a revenue of 110 million yuan for the first time, accounting for 7%; Innovation business income was 110 million yuan, a year-on-year increase of + 323%, accounting for 7%. In 2022q1, the revenue reached 560 million yuan, a year-on-year increase of + 103% and a month on month increase of – 6%; The net profit attributable to the parent company was 97 million yuan, with a year-on-year increase of + 173% and a month on month increase of + 58%; Net profit deducted from non parent company was 97 million yuan, with a year-on-year increase of + 244% and a month on month increase of + 24%.
Excellent fee control ability, Q1 single quarter net profit rate exceeded 17%, the highest level in history: the gross profit margin in 2021 was 33.7%, year-on-year -1.6pct; The net interest rate was 11%, year-on-year + 3.1pct. During the period, the expense rate was 20.3%, with a year-on-year rate of -7.6pct, of which the sales expense rate was 4.0%, with a year-on-year rate of -1.3pct, the management expense rate (including R & D) was 15.9%, with a year-on-year rate of -5.5pct, and the financial expense rate was 0.4%, with a year-on-year rate of -0.8pct. The gross profit margin in 2022q1 was 37.7%, with a year-on-year increase of + 4.4pct and a month on month increase of + 3.0pct; The net interest rate was 17.4%, with a year-on-year increase of + 4.5pct and a month on month increase of + 7.1pct. The net interest rate in a single quarter hit an all-time high. During the period, the expense rate was 16.9%, with a year-on-year ratio of -4.6pct and a month on month ratio of -0.4pct, and the ability to control expenses was steadily strengthened.
The orders for cutting equipment in the main business increased sharply, and the demand for chip OEM in new business was strong. The planned capacity was increased again: by the end of 2022q1, the company’s inventory was 620 million yuan, a year-on-year increase of + 82%; Contract liabilities were 280 million yuan, a year-on-year increase of + 74%, indicating sufficient orders on hand. By the end of 2021, the company’s orders for cutting equipment in hand were 850 million yuan, a year-on-year increase of + 132%, and the orders for main business increased sharply. In 2022q1, the company’s net cash flow from operating activities was – 140 million yuan, mainly due to the increase in raw material procurement and salary payment due to more orders. The new business slice OEM is to expand the production according to the order and demand. The company previously planned a total of 35gw of production capacity, benefiting from the strong downstream demand. On April 8, the company announced the expansion of 10GW of Lake phase II, and on April 28, the company announced the increase of 10GW of Lake phase II to 12gw. According to the rhythm of production expansion, we expect the company’s production capacity to reach 21gw, 40gw and 47gw respectively from 2022 to 2024, increasing the performance elasticity. We conservatively estimate that the price of a single GW of silicon wafer will continue to decline by 4.79 million yuan, even if we consider that the profit of a single GW of silicon wafer will continue to decline by more than 20 million yuan.
Profit forecast and investment rating: the downstream photovoltaic industry has a high outlook, and the company continues to benefit as the leader of slicing equipment & consumables; At the same time, develop the chip OEM business, which is expected to usher in new performance growth points. We estimate that the net profit attributable to the parent company from 2022 to 2024 will be 4.4 (up 10%) / 7.1 (up 13%) / 940 million yuan respectively, and the corresponding PE will be 23 / 14 / 11x respectively, raising the “buy” rating.
Risk tip: if the industry is affected by policy fluctuations, the business expansion is less than expected.
