\u3000\u3000 Hangzhou Lion Electronics Co.Ltd(605358) (605358)
Events
Hangzhou Lion Electronics Co.Ltd(605358) electronic release of annual performance forecast for 2021: it is estimated that the net profit attributable to the parent company in 2021 will be RMB 590 million-640 million, with a year-on-year increase of 192.14% – 216.90%, and the net profit attributable to the parent company after deduction will be RMB 547 million-597 million, with a year-on-year increase of 264.20% – 297.49%.
Key investment points
The performance forecast for 2021 exceeded expectations, benefiting from the continued high prosperity of the industry
According to the calculation of the company’s annual performance forecast in 2021, the company’s net profit attributable to the parent company in Q4 in 2021 is expected to be 186-236 million yuan, with a year-on-year increase of 161.97% – 232.39% and a month-on-month increase of – 4.6% – 21.03%. The high-speed growth of the company’s performance mainly benefits from the support of national policies, the acceleration of domestic substitution of semiconductors and the continuous increase of downstream demand driven by the rapid development of clean energy, new energy vehicles and intelligent economy. The company’s industry and market scene has been continuously improved, the market demand is booming, the sales orders are full, the production capacity is continuously released, and the production and sales of main products have increased significantly; At the same time, by optimizing the product structure, strengthening cost control and timely raising the product price, the company has significantly increased its revenue and profitability.
Based on the semiconductor wafer business, the volume and price rise under the condition of capacity shortage + domestic substitution
The company is a leading semiconductor silicon wafer enterprise in China. In terms of production capacity, the company laid out earlier and completed the construction of new production lines of 6-inch, 8-inch and 12-inch silicon wafers and realized full load operation. By the end of 2021, the company realized the production capacity of 12 inch silicon wafers with a monthly production capacity of 15W Wafers / month, and the benefits of production scale were significantly improved; In terms of products, after early customer expansion and product verification, the company’s 12 inch silicon wafer has covered more than 14nm technology node logic circuits, image sensing and power device chips cover all customers’ technology nodes and have been shipped on a large scale. The production and sales of 8-inch silicon wafer have been further expanded and the market share has been further improved; In terms of customers, the company has covered a stable customer base including international well-known multinational companies such as ONSEMI, AOS, Toshiba, Taiwan semiconductor and Taiwan Hanlei, as well as Chinese well-known companies such as Semiconductor Manufacturing International Corporation(688981) , Huahong Hongli, China Resources Microelectronics Limited(688396) electronics and Hangzhou Silan Microelectronics Co.Ltd(600460) .
The expansion of foundry production is in full swing, and the continuous growth of capital expenditure drives the high demand for semiconductor silicon wafers. Semi expects the global semiconductor silicon wafer shipment area to reach 14 billion square inches in 2021, with a year-on-year increase of 13.9%. It is expected that the silicon wafer shipment area will be 14.9 billion square inches in 2022 / 2023 / 2024, with an increase of 6.4% / 4.6% / 2.9% respectively. At the same time, the supply of silicon wafer capacity is tight. Companies in the industry have raised the price of silicon wafer, and the maximum increase is expected to be up to 30%. In terms of industry structure, at present, the market monopoly of international giants is obvious. In particular, the localization rate of 12 inch silicon wafer in China is low, the supply is seriously insufficient, and the substitution space is broad. It is expected that China’s semiconductor silicon wafer industry is expected to usher in a simultaneous rise in volume and price under the dual resonance of capacity shortage and domestic substitution in the future.
Power + RF two wheel drive, the company has significant advantages in the integrated layout of industrial chain
The company’s business extends to semiconductor power devices and compound semiconductor RF chips, creating an integrated industrial chain layout from silicon wafer to device / chip. In terms of power devices, the production and sales of the company’s vehicle scale power device chips and photovoltaic bypass diode control chips increased significantly in 2021. According to yole’s data, the power semiconductor device market will grow from US $17.5 billion in 2020 to US $26 billion in 2026, with an average annual compound growth rate of 6.9%; In terms of chemical RF chips, the company’s subsidiary Leong Dongxin has built a capacity of 70000 GaAs RF chips per year and realized batch shipment. In addition, the company plans to layout 360000 RF chip products per year in Haining base in the future. In the first half of 2020-2021, the company has developed more than 40 new customers while stabilizing core customers, and the production and sales of RF chips have increased steadily.
We believe that while the company is based on the semiconductor silicon chip business, it lays out power devices and RF chips to create an integrated competitive advantage in the industrial chain. The concerted efforts of the three businesses are expected to drive the company to achieve sustained and rapid growth.
Profit forecast
It is predicted that the revenue of the company from 2021 to 2023 will be RMB 2.501 billion, RMB 3.711 billion and RMB 4.999 billion respectively, and the EPS will be RMB 1.38, RMB 1.97 and RMB 2.55 respectively. The corresponding PE of the current stock price will be 85, 60 and 46 times respectively, giving the “recommended” investment rating.
Risk tips
Downside risk of industry prosperity, risk of product R & D progress falling short of expectations, risk of intensified industry competition, risk of overseas policy changes, etc.
