\u3000\u3 China Vanke Co.Ltd(000002) 049 Unigroup Guoxin Microelectronics Co.Ltd(002049) )
Event:
The company released the first quarter report of 2022. In the first quarter, the operating revenue was 1.341 billion yuan, an increase of 40.83% year-on-year and a decrease of 13.61% month on month; The net profit attributable to the parent company was 531 million yuan, an increase of 63.91% year-on-year and 6.90% month on month; Net profit deducted from non parent company was 508 million yuan, with a year-on-year increase of 64.76% and a month on month increase of 16.15%; Earnings per share reached 1.17 yuan. The company’s performance basically meets our expectations.
Comments:
Unigroup Guoxin Microelectronics Co.Ltd(002049) is a core enterprise of Ziguang group. It is one of the largest listed companies in integrated circuit design in China and a top supplier of chip design and system level solutions. It has a complete product pedigree and has a high share in the highly autonomous and controllable market. The main business includes the design and sales of integrated circuit chips, mainly special integrated circuits and intelligent security chips, which are the main source of profits of the company. In recent years, it has gradually made efforts in the field of semiconductor power devices and quartz crystal frequency devices.
The revenue of special integrated circuit business is growing rapidly, and the downstream demand drives the stable and rapid growth of the company’s overall revenue and profit. Operating revenue: in 2021, the company achieved an operating revenue of 5.342 billion yuan, a year-on-year increase of 63.35%. Quarterly, the revenue of 2021q4 reached 1.553 billion yuan, an increase of 63.42% year-on-year and 3.69% month on month; Receivables in 2022q1 increased by 40.83% year-on-year and 13.61% month on month.
Sub products: special integrated circuits achieved a revenue of 3.364 billion yuan in 2021, accounting for 51.16% of the company’s operating revenue, with a year-on-year increase of 101.18%; The revenue of intelligent security chip products was 1.664 billion yuan, a year-on-year increase of 22.11%.
With the massive demand for electronic informatization of national defense equipment and the acceleration of 5g and cloud computing construction, it is expected that the downstream demand of the company will continue to be strong in the future, the wide application of special SOPC platform products, the rapid development of special FPGA products, the improvement of system level chips and analog supporting products, and the revenue of special integrated circuit products will maintain rapid growth. Smart security chip series products, such as digital currency chip, smart wear, vehicle specification MCU and other projects, will be put into mass production, and the revenue will maintain a growth trend.
Net profit attributable to the parent company: in 2021, the net profit attributable to the parent company was 1.954 billion yuan, a year-on-year increase of 142.28%. Quarterly, the net profit attributable to the parent company in 2021q4 was 496 million yuan, a year-on-year increase of 307.33% and a month on month increase of 14.69%; The net profit attributable to the parent company in 2022q1 was 531 million yuan, a year-on-year increase of 63.91% and a month on month increase of 6.90%. The company’s revenue and profit maintained a rapid growth trend year-on-year and continued the growth trend month on month.
The scale effect is significant, and the profit margin has increased steadily. In 2021, the gross profit margin of the company reached 59.48%, with a year-on-year increase of 7.15 percentage points; The gross profit margin in the first quarter of 2022 was 63.89%, with a year-on-year increase of 9.89 percentage points. The gross profit margin of the company’s special integrated circuit products is high, and the proportion of revenue reached 62.98% in 2021, with a year-on-year increase of 11.82 percentage points. In the future, the proportion of high gross profit products such as special integrated circuits is expected to maintain further growth, driving the company’s gross profit margin to continue to increase. In 2021, the company’s net profit rate reached 37.14%, a year-on-year increase of 12.63 percentage points, higher than the increase of gross profit rate. The main reason is that due to the change of measurement method, the investment income in 2021 was 70.58 million yuan, a year-on-year significant increase compared with – 95.05 million yuan in the same period of last year. In the first quarter of 2022, the net profit margin and net interest rate were 39.59%, with a year-on-year increase of 5.6%.
The company continued to increase R & D investment, and the expense rate showed an upward trend during the period. During 2021, the cost increased by 2.6 percentage points to 20.93%; The overall expense rate in 2022q1 was 21.83%, with a year-on-year increase of 3.93%.
The company’s sales expenses and management expenses in 2021 were 244 million yuan and 223 million yuan respectively, with a year-on-year increase of 28.53% and 69.90%, mainly due to the increase of labor costs. The financial expense was 194 million yuan, an increase of 273253% year-on-year. On the one hand, the interest expense of Chengdu R & D center stopped capitalization and was fully expensed in 2021, and the scale of interest bearing debt issued by the company was expanded, resulting in an increase in interest expense over the previous year; On the other hand, exchange gains decreased compared with the previous year.
In 2021, the company’s R & D expenses reached 866 million yuan, a year-on-year increase of 43.42%, accounting for 16.21% of revenue; In 2022q1, the company’s R & D expenses reached 183 million yuan, a year-on-year increase of 127.33%. The company continues to increase R & D investment. At the same time, the proportion of expensed projects in the company’s R & D investment increased in 2021, resulting in a significant year-on-year increase in R & D expenses.
Contract liabilities, inventories and prepayments increased rapidly year-on-year. In 2021, the company’s contract liabilities increased rapidly, reaching 471 million yuan at the end of the year, an increase of 211.92% over the beginning of the period; The ending prepayment was 374 million yuan, an increase of 109.23% over the beginning of the period; The inventory at the end of the period was 1.223 billion yuan, an increase of 37.32% over the beginning of the period. The company’s liabilities increased slightly by 2022q1.4 billion at the beginning of the year; The advance payment was 491 million yuan, an increase of 31.02% over the beginning of the period; The inventory was 1.325 billion yuan, an increase of 8.31% over the beginning of the period. The company’s contract liabilities, inventories and prepayments continued to grow year-on-year, which confirmed the strong downstream demand of the company and the guarantee of the rapid growth of the company’s short-term performance.
Cash flow improved in 2021 and receivables continued to grow. In 2021, the company’s cash flow from operating activities increased by 185.51% year-on-year, reaching 1.193 billion yuan. The difference between the net cash flow and net profit generated by the company’s operating activities is large, which is mainly due to the rapid growth of the scale of special integrated circuit business, the significant increase of profit, the large amount of goods prepared and the long accounting period of sales collection, resulting in the large occupation of working capital by inventories, accounts receivable and undue notes receivable. The company’s 22q1 net operating cash flow decreased by 131.34% year-on-year to – 200 million yuan, mainly due to the increase in bonuses and taxes compared with the same period of the previous year.
In 2021, the company’s accounts receivable were 2.372 billion yuan, an increase of 42.43% over the beginning of the period; In 2022q1, the company’s accounts receivable reached 2.987 billion yuan, an increase of 25.93% over the beginning of the period. The company’s customers are concentrated in military products users. Although the accounting period is long, the risk of accounts receivable is small.
Continuous efforts in the field of special integrated circuits: with the localization of special chips and the gradual information upgrading of China’s special equipment mechanization, the total value continues to increase, and the downstream demand is expected to increase during the 14th Five Year Plan period. The high barriers of special products help the company maintain a high market share. As the leader of general-purpose FPGA in China, Ziguang Tongchuang, a subsidiary, has a large demand in video image processing and other fields in 2021. The special SOPC product platform is widely used and will be profitable in 2021. At the same time, the company’s product share in the field of digital products and supporting analog products continues to expand, and digital power supply, ADC and other products have been sold. It is expected to bring sustained growth to the company’s revenue during the 14th Five Year Plan period.
Accelerating digitalization contributes to the field of smart chips: accelerating the digitalization process of national governance drives the improvement of performance. The company’s smart chip products have significant advantages in performance, cost and reliability, and are applied in many fields such as mobile payment, finance, Internet of things, Internet of vehicles and so on; The company has deepened cooperation with Bank Of China Limited(601988) and communication network operators, involving digital currency, encrypted communication and related 5g products.
Subsidiaries of the same core micro layout in many fields of national governance digitization, and the market share of SIM card chip, social security card and traffic card chip, USB key chip, POS security chip and other fields continued to increase; At the same time, the R & D investment in high-end security chips and vehicle controller chips of convertible bond raised investment projects has increased, and new products continue to be transformed into market orders, which is expected to bring new impetus to development.
The performance of several subsidiaries is good. The subsidiary Wuxi Ziguang micro helps the semiconductor business: in 2021, the subsidiary Shenzhen Guowei realized a revenue of 3.365 billion yuan, a year-on-year increase of 101.11%, and a net profit of 1.831 billion yuan, a year-on-year increase of 108.74%. The same core microelectronics subsidiary achieved a revenue of 1.382 billion yuan, a year-on-year increase of 13.31%, and a net profit of 55 million yuan, a year-on-year increase of 49.46%. Ziguang Tongchuang, a joint-stock company, completed a new round of capital increase, with an annual revenue of 782 million yuan, a year-on-year increase of 147.75%, and realized a net profit of 409626 million yuan, turning loss into profit year-on-year. Sun company Wuxi Ziguang micro focuses on the semiconductor power business and makes a breakthrough in the research and development of miniaturized and high-frequency crystal oscillator products. In 2021, the revenue reached 130 million yuan, and the crystal business achieved 271 million yuan, with a year-on-year increase of 37.6%, a gross profit margin of 20.82% and a year-on-year increase of 1.07%.
Issuing bonds to support the active layout of automotive chip and crystal business: in 2021, the company completed the issuance of convertible corporate bonds, raising a total of RMB 1.5 billion (net amount of actually raised funds of RMB 1.489 billion) for “new high-end safety series chip R & D and industrialization project”, “vehicle controller chip R & D and industrialization project” and supplementary working capital. By the end of 2021, The company invested a total of 604 million raised funds. While maintaining the current special integrated circuit and safety intelligent chip products, the company actively expands new market growth points, and is expected to lay out in new energy, security, ups and other fields. The company cooperates with well-known Chinese automobile manufacturers to realize small batch supply of vehicle specification level safety chips. The company’s crystal products have a certain market share in communication equipment, automotive electronics and other fields, and gradually cooperate with OEMs to actively expand high-end production capacity.
Profit forecast and investment rating:
In view of the market competitiveness of the company as the leader of special integrated circuits and the high industry prosperity brought by the wave of safety information construction, the profit forecast is adjusted according to the latest financial report. It is estimated that the net profit attributable to the parent company in 20222024 will be 2.913 billion yuan, 4.120 billion yuan and 5.683 billion yuan respectively, and the EPS will be 4.77 yuan, 6.74 yuan and 9.34 yuan respectively. The corresponding PE of the current stock price will be 36.67 times, 25.96 times and 18.74 times respectively, maintaining the investment rating of “buy”.
Risk tips:
The progress of new product research and development is less than expected; The demand for electronic informatization of national defense equipment is less than expected; Rising prices of raw materials; Capacity supply is less than expected.
