Dongxin Co., Ltd. (688110)
Events
Dongxin issued the annual report of 2021 and the first quarterly report of 2022: in 2021, the operating revenue was 1.134 billion yuan, a year-on-year increase of 44.62%, the net profit attributable to the parent was 262 million yuan, a year-on-year increase of 1240%, and the net profit attributable to the parent after deduction was 255 million yuan, a year-on-year increase of 1354%; In 2022, Q1 achieved an operating revenue of 344 million yuan, a year-on-year increase of 82.86%, a net profit attributable to the parent company of 110 million yuan, a year-on-year increase of 216.92%, and a net profit attributable to the parent company of 110 million yuan after non deduction, a year-on-year increase of 280.88%.
Key investment points
Q1 greatly exceeded market expectations and its profitability continued to improve significantly
In terms of products, in 2021, the company’s NAND / nor / DRAM / MCP achieved revenue of RMB 6.6/1.88/0.79/178 million respectively, with a year-on-year increase of 65.63% / 2.71% / 68.73% / 34.19% respectively; In terms of gross profit margin, the overall gross profit margin of the company in 2021 was 42.12% (year-on-year + 13.14pct), and the gross profit margin of NAND / nor / DRAM / MCP was 51.07% / 30.46% / 41.25% / 19.54% respectively, with a year-on-year increase of + 28.67pct / + 6.32pct / + 8.87pct / + 13.35pct respectively; In terms of period expenses, the expense rate (excluding R & D) in 2021 was 5.87% (year-on-year -6.44pct), including sales expense rate of 1.4% (year-on-year -1.2pct), management expense rate of 5.26% (year-on-year -0.54pct) and financial expense rate of – 0.8% (year-on-year -4.71pct). In addition, in 2021, the company’s R & D investment reached 75 million yuan (year-on-year + 57.37%), and the R & D expense rate reached 6.6%.
In 2022, the performance of Q1 company greatly exceeded the market expectation, and the net profit attributable to the parent increased by 17% month on month, and the net profit attributable to the parent increased by 18% month on month after deducting non. In addition, the company continued to optimize its product structure. In 2022, the gross profit margin of Q1 reached 49.91%, with a year-on-year increase of 19.93pct.
Advanced manufacturing process, high-capacity new product launch, covering high-quality customer base
The company is one of the few companies in China with independent intellectual property rights of core technologies and complete solutions for NAND, nor and DRAM memory chips. Among them, 24nm NAND and 48nm nor products are at the leading level in China.
Continuous iteration of the company’s products in 2021: 1) cooperate with Semiconductor Manufacturing International Corporation(688981) in depth to complete the first 19 nm SLC NAND film; 2) Realize the full coverage of design and R & D of 1GB to 32GB series of 24nm process; 3) Continuously improve the process and product yield of Semiconductor Manufacturing International Corporation(688981) 24nm platform; 4) Realize the design of large capacity nor and PSRAM.
With its remarkable performance in terms of processes, processes, and performance, the company’products not only have been certified by Qualcomm, Broadcom, Broadcom, MediaTek, unistech, purple light, zoom, ztmicro, ztmicro, Qualcomm, Broadcom, Broadcom, MediaTek, MediaTek, purple light, ZTE, ztmicro, 60389 Rockchip Electronics Co.Ltd(603893) , Shenzhen Transsion Holdings Co.Ltd(688036) , LG, Renesas, huierfeng and other well-known customers at home and abroad, It is widely used in communication equipment, security monitoring, wearable, mobile terminals, etc.
Domestic SLC NAND leaders can expect to enter the military vehicle regulation level
The company raised about 170 million yuan for the R & D and industrialization of vehicle specification level flash memory products. At present, the company’s SLC NAND is stable in terms of durability and data retention characteristics. Not only has the erasure times of a single chip exceeded 100000 times in the industrial temperature control standard, but also can maintain the data validity in the extreme environment of – 40 ℃ to 105 ℃ for 10 years. At present, several products have passed the vehicle specification level test and mass production is imminent. According to Gartner data, NAND storage consumption in global ADAS in 2019 was 220 million GB, with a year-on-year increase of 300%. It is expected that NAND storage consumption in global ADAS will reach 4.15 billion GB by 2024, with a compound growth rate of 79.8% from 2019 to 2024. Under the wave of automotive intelligence, the storage chip market has a broad space.
Profit forecast
It is predicted that the company’s revenue from 2022 to 2024 will be 1.607 billion yuan, 2.146 billion yuan and 2.660 billion yuan respectively, and the EPS will be 0.93, 1.24 and 1.53 yuan respectively. The corresponding PE of the current stock price will be 33, 25 and 20 times respectively, maintaining the “recommended” investment rating.
Risk tips
The downside risk of industry prosperity, the risk that the R & D Progress of new products is less than expected, the risk of intensified industry competition, the risk of overseas policy changes, etc.
