\u3000\u3 Shengda Resources Co.Ltd(000603) 501 Will Semiconductor Co.Ltd.Shanghai(603501) )
Event: Will Semiconductor Co.Ltd.Shanghai(603501) released the annual report of 2021 and the first quarterly report of 2022. In 2021, the company achieved revenue of 24.104 billion yuan (YoY + 21.59%), net profit attributable to parent company of 4.476 billion yuan (YoY + 65.41%), and net profit attributable to non parent company of 4.003 billion yuan (YoY + 78.3%). In Q1 2022, the company realized revenue of 5.538 billion yuan (yoy-10.84%, qoq-4.33%), net profit attributable to parent company of 896 million yuan (yoy-13.9%, qoq-6.42%) and net profit attributable to parent company of 902 million yuan (yoy-4.45%, qoq-3.52%) after deduction of non profits. In addition, the company issued the 2022 equity incentive plan, which plans to grant no more than 15 million stock options to 2349 people, including directors, senior executives, middle managers and relevant core technical (business) personnel. The exercise price of the stock options granted this time is 166.85 yuan / share.
The three business systems have developed in coordination and the product structure has been continuously optimized. In 2021, the company’s semiconductor design business achieved a revenue of 20.38 billion yuan (YoY + 18.02%), a gross profit margin of 37.9% (YoY + 6.15pct), and a significant increase in profitability, mainly benefiting from the optimization of product structure and the high outlook of the industry. At present, the company’s semiconductor design business has formed three business systems: image sensor solutions, touch and display solutions and simulation solutions. The products are widely used in consumer electronics, security, automobile, medical treatment, AR / VR and other fields. The revenue of the three business segments accounted for 71% / 8% / 6% respectively in 2021.
Among them, the revenue of smart phones in image sensor solutions accounts for 57% (accounting for 47.6% of semiconductor design business), which is further reduced; The revenue of security monitoring and automotive electronics accounted for 18% and 14% respectively (accounting for 15% and 12% of the semiconductor design business respectively). The revenue proportion was further improved, and the profitability of the company’s image sensor business was continuously improved by structural optimization. On the basis of inheriting the advantages of Synaptics products and technology, the touch and display business continued to promote product iteration and customer expansion. In 2021, the revenue was 1.963 billion yuan (YoY + 163.9%), and the gross profit margin was 60.9% (YoY + 36.87pct). Fully benefiting from the high prospect brought by the shortage of goods in the industry, the gross profit margin increased significantly, which led to the increase of the company’s semiconductor design business profits.
Automotive semiconductor star sea, automotive CIS business is growing rapidly. In 2021, the company’s automotive CIS business accounted for about 12% of the company’s semiconductor design business revenue, realizing a revenue of about 2.4 billion yuan, with a year-on-year high-speed growth. In the previous Will Semiconductor Co.Ltd.Shanghai(603501) automotive semiconductor in-depth special report, we analyzed in detail the layout and growth path of Weill’s automotive semiconductor business with automotive CIS as the core from three levels. In 2021, benefiting from the global wave of electric and intelligent vehicles, the demand for high pixels of on-board CIS and the number of cameras equipped on a single vehicle increased significantly. As the world’s core on-board CIS supplier, weir has launched multiple models of products from VGA to 8m that can meet different application scenarios inside and outside the cabin. The company has been deeply engaged in the automotive CIS field for many years and has accumulated rich technology. The Hale (HDR and LFM engine) combination algorithm developed by the company can provide excellent HDR and LFM performance at the same time; DeepWell ™ Dual conversion gain technology can significantly reduce motion artifacts; Separate pixel LFM technology combined with four-way capture can provide high performance in the whole temperature range of the vehicle; In addition, the company also provides customers with a variety of automotive application specific integrated circuits (ASICs). Oax8000 adopts chip stacking architecture and integrates special DMS processors of NPU and ISP. In 2022, with the continuous improvement of the company’s vehicle CIS market share in China and overseas, and the large volume of automotive semiconductors other than CIS, the company’s automotive semiconductor business is expected to continue to maintain rapid growth and further increase its proportion in the company’s overall revenue.
The security CIS business grew rapidly, and the proportion of mobile phone CIS high-end products increased steadily. In addition to automotive CIS, the company’s revenue in the field of security CIS also achieved rapid growth. In 2021, the company’s security CIS revenue exceeded 3 billion yuan, with a year-on-year increase of about 70%, mainly due to the company’s continuous efforts in medium and high-end security products and the continuous upgrading of product structure. The os02h10 product developed by the company integrates high-quality near infrared (NIR) and nyxel and purecelplus technologies with ultra-low light performance. It has excellent quantum efficiency and can realize low-power IR lighting in a completely dark environment. In the field of mobile phone CIS, while maintaining a stable revenue scale, the company has steadily increased the proportion of high-order pixel CIS revenue. After ov64b, it has successfully launched 50 million pixels, 60 million pixels and 200 million pixels / 0.61 μ M and other products of different models. Recently, the company also achieved a major breakthrough in pixel technology – 0.56 μ M ultra-small pixel size, while providing high quantum efficiency (QE), excellent four phase detection (QPD) autofocus technology and low power consumption, continues to lead the market in pixel miniaturization. In addition, in 2021, the company’s CIS business revenue also increased significantly in the leading areas of laptop, medical treatment and AR / VR.
Tddi business continues to make breakthroughs and create new profit growth points. In 2021, the company’s tddi business still achieved rapid growth in the whole year under the condition of limited production capacity in the first half of the year, with a revenue of 1.963 billion yuan (YoY + 163.9%). At the same time, due to the tight supply and demand of tddi products, the gross profit margin of the company’s tddi business reached 60.9% (YoY + 36.87pct), becoming a new profit growth point of the company. In 2021, the company’s tddi business continued to promote product iteration and customer expansion on the basis of inheriting the advantages of Synaptics products and technology. The company’s tddi product td4375 was mass produced in many projects of first-line mobile phone brand customers, and launched sinking hdtddi-td4160 ahead of the industry, which was widely recognized by the market. Looking forward to 2022, the company will introduce a new R & D team to supplement the oledddic product line and further improve the product matrix. At present, the company’s oledddic products have been verified in China’s head screen factory and will be applied to the product scheme of smartphone customers in 22 years. At the same time, the company’s production capacity guarantee will be more sufficient in 22 years. It is expected that the company’s touch and display business will still maintain high growth and high profitability in 22 years.
Investment suggestion: it is estimated that the net profit attributable to the parent company in 22 / 23 / 24 years will be RMB 5.444/68.758537 billion, and the corresponding current price PE will be 24 / 19 / 15 times respectively. We are optimistic about the development path of the company’s platform semiconductor and its in-depth layout in the automotive semiconductor field, and maintain the “recommended” rating.
Risk warning: the company’s new product research and development is less than the expected risk; Downstream industry boom decline risk; Market competition intensifies risks.
