\u3000\u3000 Hangzhou Lion Electronics Co.Ltd(605358) (605358)
Event:
The company released the performance forecast for 2021. It is estimated that the net profit attributable to the shareholders of the listed company in 2021 will be RMB 590 million to RMB 640 million, with a year-on-year increase of 192.14 to 216.90%. The non net profit attributable to the parent company was 547 million yuan to 597 million yuan, with a year-on-year increase of 264.20% to 297.49%.
Comments:
The performance growth exceeded expectations and the market demand was strong. The production and sales volume of the company increased significantly
The company’s silicon wafer, power chip and RF business have significantly increased their operating revenue in 2021. On the one hand, the production capacity of the company’s products has continued to grow rapidly and the product structure has been continuously optimized. The technical capacity of high-end 12 inch silicon wafer has covered the logic circuit of technical nodes above 14nm, the image sensing and power device chips have covered all customers’ technical nodes and have been shipped on a large scale, and the production and sales of vehicle specification power chips and photovoltaic bypass diode control chips have increased significantly, The production and sales of RF chips also increased steadily. On the other hand, benefiting from the rapid growth of new energy demand and tight supply under the high market climate, the price of some products of the company has increased, the product volume and price have risen, and the company’s performance has increased rapidly.
In 2022, the wafer industry is expected to continue to be in short supply during the high-speed production period of the wafer factory
In terms of demand, at the end of 2021, 19 high-capacity wafer factories in the world entered the construction period, and another 10 wafer factories will start construction in 2022. With the gradual release of wafer factory capacity, the demand for silicon wafers has increased rapidly. At the same time, overseas leading enterprises are currently cautious about silicon wafer expansion. It is expected that the 12 inch silicon wafer market will continue to be in short supply in 2022. In China, Huahong, China Resources Microelectronics Limited(688396) , Hangzhou Silan Microelectronics Co.Ltd(600460) and other power plants continue to expand production, and the corresponding demand for heavily doped silicon wafers is strong. China’s leading silicon wafer plants such as Hangzhou Lion Electronics Co.Ltd(605358) will deeply benefit from the domestic substitution demand.
Profit forecast
Considering the pattern of simultaneous rise in volume and price under the high climate of the industry, we adjusted the company’s performance forecast. It is estimated that the company will realize a net profit attributable to the parent company of RMB 595, 1050 and 1549 million from 2021 to 2023, with a three-year CAGR of 97.20%, corresponding to P / E of 90x, 51x and 35x. The company will be given a 22-year 60xp / E, corresponding to the target price of RMB 137.76, and the company’s rating will be raised to “buy”.
Risk tips
Cyclical fluctuations in the semiconductor industry; Technical iteration is not as expected; The ramp up of production capacity was less than expected.
