\u3000\u3000 Hangzhou Lion Electronics Co.Ltd(605358) (605358)
Event: the company issued the announcement of performance increase in 2021; It is estimated that the net profit attributable to the parent company in 2021 will be RMB 590 million to RMB 640 million, with a year-on-year increase of 192.14 to 216.90%. It is estimated that the net profit deducted from non-profit is 547 million yuan to 597 million yuan, with a year-on-year increase of 264.20% to 297.49%.
Comments: silicon chip + discrete device + RF chip, three wheel drive is expected in the future. The reasons for the company’s outstanding performance in 2021 include: 1) the company laid out earlier and completed the construction of new production lines of 6, 8 and 12 inch silicon wafers, and implemented the capacity and technical transformation and improvement of power device chip manufacturing production line, which fully met the current hot market demand, and all production lines of the company operated at full capacity. 2) Continue to strengthen the development of new products and technologies, continue to promote the development of high-quality customers, increase cooperation with strategic customers, and further optimize the product structure. 3) Through management improvement and lean production, remarkable achievements have been made in technical improvement, yield improvement and cost control and saving, effectively improving production capacity and quality, reducing costs and enhancing the profitability of the company; 4) According to the market supply and demand situation and the change of purchase cost of raw and auxiliary materials, the company timely increases the product price.
It is optimistic that the company will continue to benefit from the “semiconductor silicon wafer + discrete device” industry and domestic substitution opportunities. The prosperity of the industry has improved, and the company’s market share of 8-inch silicon wafer has increased steadily thanks to various factors such as the acceleration of domestic substitution of semiconductors and the continuous increase of downstream demand driven by the rapid development of intelligent economy. With the rapid development of new energy vehicles, AI, Internet of things and other application fields, the semiconductor silicon wafer and discrete device industry has broad prospects for development in the future. According to semi’s prediction, global silicon wafer shipments will reach 12.5 billion square feet in 2021, with a year-on-year increase of 5%, and will reach 13.2 billion square feet in 2022, with a year-on-year increase of 5.3%. Benefiting from the support of national industrial policies, the proportion of sales revenue of China’s semiconductor discrete device industry in the world has increased year by year, and the market scale has increased steadily. Power semiconductors are growing rapidly in various application fields: on the one hand, new energy vehicles are growing rapidly, on the other hand, clean energy business is growing rapidly. On the other hand, both businesses bring the demand for semiconductor power devices. In addition, there are more and more new electronic and intelligent application scenarios. On the whole, we believe that the market prosperity of the power semiconductor industry continues to maintain. The company laid out earlier and completed the construction of new 6-inch and 8-inch silicon wafer production lines, and implemented the capacity and technical transformation and improvement of power device chip manufacturing production lines, which is expected to benefit from the market space brought by semiconductor business cycle + import substitution.
Continue to strengthen the development of new products and technologies, so that the company has a long-term competitive advantage. The company continues to optimize the product structure: in terms of 12 inch silicon wafers, after early customer expansion and product verification, the technical capacity has covered more than 14nm technical nodes, logic circuits, image sensing and power device chips have covered all customers’ technical nodes and have been shipped on a large scale. By November 2021, the company’s capacity of 12 inch silicon wafer products was 20000 pieces / month, and the company reached a capacity of 150000 pieces / month of 12 inch silicon wafer by the end of 2021. At present, the built 12 inch silicon wafer capacity of 20000 pieces / month has realized large-scale shipment on the one hand, and on the other hand, it is also continuing to carry out customer verification; In terms of 8-inch silicon wafers, the production and sales volume were further expanded and the market share was further improved; In terms of semiconductor power device chips, the production and sales of vehicle specification power device chips and photovoltaic bypass diode control chips have increased significantly; In terms of compound semiconductor RF chips, the production and sales volume has also increased steadily. At present, the company’s subsidiary Leong Dongxin is mainly engaged in the OEM manufacturing of GaAs RF chips. At present, it has built a production capacity of 70000 pieces / year and has realized batch shipment. The company has 360000 pieces / year of RF chip products in Haining base (including 180000 pieces / month of GaAs RF chip, 60000 pieces / month of silicon carbide based gallium nitride chip and 120000 pieces / month of VCSEL chip). At present, it is still in the planning stage. The company will start the construction of Haining base as soon as possible according to the actual situation and administrative approval of the company.
5.2 billion will be added to the ground, and continue to increase investment in silicon wafer + power semiconductor + silicon epitaxial wafer projects. The company raised a total of 5.2 billion yuan to invest in the technical transformation project with an annual output of 1.8 million 12 inch silicon wafers for integrated circuits, 720000 6-inch power semiconductor chips, 2.4 million 6-inch silicon epitaxial wafers and supplement working capital. The company will enrich product categories, expand product production capacity, improve industrial layout and enhance comprehensive competitiveness. Specifically, it will increase its share in the mainstream market of semiconductor silicon wafers, greatly increase the production capacity of grooved Schottky power diode chips, and consolidate the market leader position of silicon wafers of 8 inches and below.
Investment suggestion: Based on the company’s long-term growth momentum under the high demand of semiconductor silicon wafer and discrete device industry and domestic substitution logic, we raised our forecast, adjusted the net profit forecast for 21 / 22 / 23 from RMB 580 / 6.3/820 million to RMB 630 / 9.3/1.28 billion, and maintained the “buy” rating.
Risk warning: the performance pre increase data is only preliminary accounting data. The specific and accurate financial data are subject to the data in the 2021 annual report officially disclosed by the company, the concentration of sales areas, the rise of labor costs, the aggravation of the epidemic situation and the loss of R & D technicians
