\u3000\u3 Shengda Resources Co.Ltd(000603) 501 Will Semiconductor Co.Ltd.Shanghai(603501) )
Key investment points
Event: on May 16, the company issued an equity incentive announcement. Taking May 16, 2022 as the grant date of stock options, it plans to grant 2349 directors, senior managers, middle managers and core technical (business) personnel of the company with a total of no more than 15 million stock options, accounting for 1.71% of the total share capital of the company at the time of announcement, and the exercise price is 166.85 yuan / share. The total amortization expense of the equity incentive is 210 million yuan, of which the amortization expense from 2022 to 2025 is 6919.5/8631.6/4406.312652 million yuan respectively.
High performance growth in 2021, and Q1 in 2022 will be greatly affected due to flat demand. On April 27, the company released the 2022q1 report: the company achieved a revenue of 5.54 billion yuan, a year-on-year increase of – 10.8%; The net profit attributable to the parent company was 900 million yuan, a year-on-year increase of – 13.9%. Combined with the annual report of 2021: 1) revenue side: in 2021, the company achieved revenue of 24.1 billion yuan, a year-on-year increase of + 21.6%, of which cis / semiconductor distribution / tddi / semiconductor design achieved revenue of 16.26/26.6/19.6/1.44 billion yuan, a year-on-year increase of + 10.7% / + 47.3% / + 163.9% / + 15.5% respectively. 2) Profit side: in 2021, the gross profit margin / net profit margin of the company was 34.5% / 18.9% respectively, with a year-on-year increase of + 4.6pp / + 5.3pp respectively; In 2022q1, the gross profit margin / net profit margin of the company is 35.3% / 16.1% respectively. 3) Expense side: in 2021, the company’s sales / management / R & D expense ratio was 2.1% / 2.9% / 8.8% respectively, with a year-on-year increase of + 0.3pp / – 1.1pp / + 0.04pp respectively; In 2022q1, the company’s sales / management / R & D expense ratio is 2.3% / 3.3% / 9.5% respectively.
The company’s equity incentive is bound to the company’s interests, and the company’s equity assessment shows the confidence of employees. The company set the assessment objective of the incentive plan in 2022 as follows: Based on the deduction of non parent net profit in 2021, the growth rate of non parent net profit (excluding the impact of share based payment expenses) from 2022 to 2024 shall not be less than 12% / 35% / 50% respectively, and the corresponding deduction of non parent net profit shall be about 5.09/61.4/6.82 billion yuan respectively, and the corresponding year-on-year growth rate from 2022 to 2024 shall be 12.0% / 20.5% / 11.1% respectively. Compared with the company’s incentive plan in 2021, this incentive will increase the assessment objectives in 2022 and 2023 by about 13.4% and 14.0% respectively, showing the company’s business confidence.
The demand for automobile CIS and DDI is strong, and the company is expected to blossom in multiple lines. In 2021, thanks to the accelerated penetration and pixel upgrading of CIS in the automotive field and the demand for higher-level CIS in intelligent scenes, the company’s CIS business further increased; Thanks to the good demand of T DDI products and the penetration of the company’s related products in customers, the touch and display business has also developed rapidly. In the future, the demand for automotive CIS and t DDI is expected to remain strong. The company also continues to make efforts in CIS, touch, simulation and other businesses, and is expected to continue to realize multi line development.
Profit forecast and investment suggestions. The company still maintains strong R & D in the case of high market share. From 2022 to 2024, the company’s EPS is expected to be 6.49/8.21/9.97 yuan respectively. Considering the company’s space in on-board CIS and the still strong demand for tddi under the tight situation, we continue to be optimistic about the company’s industry position and maintain the “buy” rating.
Risk warning: the downstream demand is less than the expected risk; Customer development is less than expected risk; Risk of falling product prices.
