\u3000\u3 Guocheng Mining Co.Ltd(000688) 385 Shanghai Fudan Microelectronics Group Co.Ltd(688385) )
Event: the company recently released the 2022q1 performance report. During the performance period, the company realized an operating revenue of 776 million yuan, a year-on-year increase of 54.54%, a month on month increase of 4.16%, a net profit attributable to the parent company of 233 million yuan, a year-on-year increase of 169.62%, a month on month increase of 84.92%, and a net profit attributable to the parent company of 226 million yuan after deduction, a year-on-year increase of 217.81% and a month on month increase of 109.26%.
The company’s performance increased significantly in the first quarter, and the recovery of profitability led to the release of profits. In the first quarter of 2022, the company continued to optimize its product structure, which led to a significant increase in its profitability. In terms of product revenue, the security and identification chip was about 215 million yuan, the non-volatile memory was about 246 million yuan, the smart meter chip was about 102 million yuan, the FPGA and other chips were about 171 million yuan, and the test service revenue (after merger and offset) was about 43 million yuan. Benefiting from the increase in the proportion of high gross margin products and the increase in the price of some products, the comprehensive gross margin of products increased to 63.59% from 51.13% in the same period last year, and the net profit margin reached a record high of 30.70%. In addition, the amortization of equity incentive expenses of the company in this quarter was about 369506 million yuan, and the operating performance was more brilliant after adding back. R & D expenses, sales expenses, management expenses and other expenses increased compared with the previous period. In recent years, the number of customers of the company has increased rapidly, new application fields have been continuously expanded, and the downstream progress of four large products has been continuously improved. In 2021, due to the bottleneck of production capacity, some products are in short supply. With the mitigation of production capacity and the continuous optimization of product structure of each product line, and the proportion of high gross profit and high value-added products, the company’s performance is expected to continue to exceed expectations.
The company is one of the leading manufacturers in the field of FPGA in China. With the technological breakthrough, the process of domestic substitution is accelerated. In 2021, the company achieved a revenue of 427 million yuan in the field of FPGA, with a year-on-year increase of 109% and a gross profit margin of 84.9%. Since 2004, the company has started to layout FPGA, with the leading technical level in China. In 2019, the company has achieved mass production and sales of 28 nm gate level FPGA, filling the gap of high-end FPGA in China. At present, the company can provide 10 million gate level, 100 million gate level FPGA chips, PSoC and other series of products. The penetration rate of 28nm products is increasing. By the end of 2021, the company has sold 28nm related FPGA products to 300 + customers. In addition, the research and development of 14 / 16nm one billion gate FPGA has been continuously promoted. It is expected to be streamed from 2021 to 2022, provide the initial sample of the product in 2022, and mass produce and ship in 2023; PSoC products are mainly used in high-speed communication, signal and image processing, industrial control and other fields, which have been highly recognized by customers. In the first three quarters of the 21st century, PSoC products received tens of millions of sales revenue. With the company actively coordinating production capacity to meet downstream demand, PSoC products are expected to grow rapidly in 2022.
The technical strength has made continuous breakthroughs, and the performance of all sectors has risen simultaneously. (1) Security and identification chip: the company achieved a revenue of 866 million yuan in 2021, with a year-on-year increase of 42% and a gross profit margin of 51.07%. The company has three product directions: RFID and sensor chip, smart card and security chip and intelligent identification chip. In the era of the rise of the Internet of things, the company’s products have accumulated profound experience and advantages in the fields of RF and security reliability, security detection and certification of third-party authorities and finance. With the increase of downstream penetration and demand, the increase of the company’s product price drives the continuous growth of gross profit margin; (2) Smart meter chip: the company achieved a revenue of 296 million yuan in 2021, with a year-on-year increase of 64% and a gross profit margin of 56.6%. The company’s smart meter MCU occupies the first share in the single-phase smart meter MCU market of the State Grid, and the cumulative shipment of smart meter MCU exceeds 400 million. MCU products rely on the expansion of intelligent field, and the demand is relatively stable. We judge that with the arrival of the peak season of meter replacement and the continuous increase of general low-power MCU, the company’s MCU chip field will maintain rapid growth; (3) Nonvolatile memory: the company achieved a revenue of 721 million yuan in 2021, with a year-on-year increase of 41% and a gross profit margin of 55.7%. The company’s main products include EEPROM, norflash and slcnandflash. EEPROM products have been sold at 0.13 μ M process platform realizes the industry’s minimum 1.0 μ M2cell products have been and mass produced. Some products have passed industrial and vehicle regulation level certification and entered the supply chain of key customers such as Ningde. Norflash products have passed the certification of mainstream chip manufacturers such as Qualcomm, Broadcom and MediaTek. In the future, we will continue to optimize the product structure and promote the overall profitability.
Investment suggestion: considering that the company is a leading manufacturer in the field of FPGA in China, we expect the net profit in 2022, 2023 and 2024 to be 810 / 1049 / 1309 million yuan respectively, corresponding to 53 / 41 / 33 times of PE. The company is one of the leading manufacturers in the FPGA industry in mainland China. Under the background of localization, the downstream demand is booming, the product structure is continuously optimized, and both scarcity and growth are available. It is rated as “overweight” for the first time.
Risk warning event: FPGA market demand and prosperity may be lower than expected, product price decline risk and upstream raw material price rise risk.
