\u3000\u3 Shengda Resources Co.Ltd(000603) 986 Gigadevice Semiconductor (Beijing) Inc(603986) )
Events
According to the annual report of 2021 and the first quarterly report of 2022, the company achieved a revenue of 8.51 billion yuan in 2021, a year-on-year increase of 89.25%, and the net profit attributable to the parent company was 2.337 billion yuan, a year-on-year increase of 165.33%; Meanwhile, the company achieved an operating revenue of 2.230 billion yuan in 2022q1, a year-on-year increase of 39.02%; The net profit attributable to the parent company was 686 million yuan, a year-on-year increase of 127.65%.
Key investment points
The market demand is strong, the products are in short supply, and the profitability has been greatly improved. Due to the strong market demand for memory chips and MCU products, the company has actively explored new markets and customers, continued to upgrade and optimize the product structure and customer structure, greatly improved the profitability of the company, and significantly increased the comprehensive gross profit margin from 37.38% in 2020 to 46.54% in 2021. In terms of breakdown, in 2021, the company shipped 3.288 billion memory chips, with a year-on-year increase of 22.43%, realized an operating revenue of 5.451 billion, with a year-on-year increase of 66.04%, and the gross profit margin increased by 4.92 percentage points to 39.71%; The shipment volume of MCU reached 394 million, with a year-on-year increase of 106.11%, the operating revenue reached 2.456 billion, with a year-on-year increase of 225.36%, and the gross profit margin increased by 19.51 percentage points to 66.36%. The company’s core businesses have achieved both volume and price increases, with good overall performance and performance in line with expectations.
China’s norflash memory leader continues to expand the types of memory chips. The company is the absolute leader of norflash storage in China. In 2020, the company’s norflash products ranked third in the world, with a market share of 15.60%. The company continues to make efforts in the norflash market, the medium and large capacity norflash customer base and coverage continue to expand, the demand continues to be stable, and is expected to be further improved. At present, the company has a comprehensive layout of 2mb-2gb norflash, and spinor products have been adopted in batches in many automobile enterprises. It is expected to become the fastest-growing application field of norflash in the future. In addition, the company has successively expanded NAND and DRAM memory chips. Among them, nandflash products have achieved mass production of 38nm and 24nm process nodes, completed 1gb-8gb mainstream capacity coverage, and realized the comprehensive layout from spinorflash to spinandflash vehicle specification products; In terms of DRAM products, the company’s first private brand DRAM product 4gbddr4 (19nm process) was launched in June 2021, and has been certified on mainstream consumer platforms and mass produced and used by many clients. 17nmddr3 products are also advancing in an orderly manner as planned. In the future, it is expected to continue to expand the DRAM niche market by relying on the excellent OEM capacity of Hefei Changxin, and the product volume can be expected.
MCU “department stores” are constantly enriched, and the field of vehicle regulations continues to penetrate. It is expected to benefit from domestic substitution in the future. The company’s MCU business focuses on building a “MCU department store”. At present, it has successfully mass produced about 400 models of 35 series to meet the needs of various high, medium and low-end markets, and continues to explore new fields and customers to achieve good growth in industries (including industrial automation, electric power, new energy, etc.), security monitoring, automobiles, household appliances and other fields. Since 2020, the company’s MCU products have continued to increase in volume, and the shipment volume has increased from 109 million in 2019 to 394 million in 2021. In the field of automotive applications, the company’s MCU products have been applied in the automotive aftermarket, and the certification of front mounted MCU products is being accelerated. In addition, the company is actively promoting the mass production of 40nm vehicle specification MCU products, which have been streamed and tested by customers. The product will mainly face the general body market, and is expected to fully benefit from the domestic substitution of vehicle MCU products in the future.
Profit forecast and investment suggestions: the company is the leader of norflash storage in China. It continues to expand the types of storage chips and MCU. The downstream customers expand smoothly and the product volume can be expected. It is estimated that the operating revenue of the company from 2022 to 2024 will be 11.457 billion, 13.998 billion and 16.488 billion respectively, the net profit attributable to the parent company will be 2.986 billion, 3.625 billion and 4.343 billion respectively, the corresponding EPS will be 4.47 yuan, 5.43 yuan and 6.51 yuan respectively, and the corresponding PE will be 28.91x, 23.82x and 19.88x respectively.
Risk factors: the launch progress of new products of memory chip and MCU is less than expected; The import of downstream customers is less than expected; The industry demand fluctuates periodically, and the downstream demand is lower than expected; Affected by the epidemic in China, the supply chain is blocked; Industry competition intensifies.
