\u3000\u3000 Hangzhou Lion Electronics Co.Ltd(605358) (605358)
Event:
The company issued the announcement of performance increase in 2021: it is expected that the net profit attributable to the parent company in 2021 will be 590 million yuan to 640 million yuan, with a year-on-year increase of 192.14 to 216.90%. It is estimated that the net profit deducted from non parent company is 547 million yuan to 597 million yuan, with a year-on-year increase of 264.20% to 297.49%.
Key investment points:
The 2021 performance guideline exceeded expectations, with high industry prosperity + capacity advantage + product structure optimization, and the company’s performance increased rapidly. In 2021q4, the company realized a net profit attributable to the parent company of RMB 186-236 million in a single quarter, with a year-on-year increase of 161.77% – 232.39% and a month-on-month increase of – 4.62% to 21.03%, mainly due to: 1) the company’s earlier layout and completion of the construction of a new 6 / 8-inch silicon wafer production line, which realized the capacity and technical transformation of the power device chip manufacturing line, and the company’s production and sales were booming under the background of hot market demand, Drive performance growth; 2) Further optimize the company’s product structure, continue to increase investment in new product R & D, promote the development of high-quality customers, and increase cooperation with strategic customers; 3) The company has made remarkable achievements in technical improvement, yield improvement and cost control, reducing costs and improving production capacity and quality. In addition, the company timely adjusts product prices according to market supply and demand and cost changes to enhance the company’s profitability.
RMB 5.2 billion will be added, and we are optimistic about the growth of the company under the trend of domestic substitution and prosperity improvement. As a leading foundry enterprise of semiconductor silicon chip + power device + compound semiconductor RF chip in China, the company has strong technical strength and multi-point R & D. In terms of silicon wafers, after early customer expansion and product verification, the technical capacity of 12 inch silicon wafers 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; The production and sales of 8-inch silicon wafers were further enlarged, 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 company has built a capacity of 70000 GaAs RF chips per year and has realized batch shipment. There are 360000 RF chip products per year in Haining base (including 180000 GaAs RF chips, 60000 SiC Based Gan chips and 120000 VCSEL chips). The fixed increase of the company has been implemented, and the total amount of funds raised is 5.2 billion yuan. The fixed increase is used for the technical transformation of 12 inch silicon wafers for integrated circuits with an annual output of 1.8 million pieces, 6-inch power semiconductor chips with an annual output of 720000 pieces, and 6-inch silicon epitaxial wafers with an annual output of 2.4 million pieces. The company’s raising and investment is conducive to breaking through the capacity bottleneck. Under the background of downstream booming demand, the company is expected to continue to expand its market share and accelerate its growth in the future.
Profit forecast and investment rating: Hangzhou Lion Electronics Co.Ltd(605358) as a rare complete industrial chain platform with silicon wafer and power device manufacturing capacity in China, it has strong competitive advantages in industrial chain integration, technology research and development, product customers and other aspects. At the same time, it has arranged the field of compound semiconductor RF OEM with remarkable results. With the expansion of downstream wafer factories, the expansion of demand in new energy vehicles, 5g, industrial control and other fields, and the general trend of domestic substitution under the background of independent control, the OEM of semiconductor silicon wafers, power devices and RF chips in China has increased. We believe that the company has strong core competitiveness, based on the traditional advantageous fields, overweight the layout of large silicon wafers and power devices, and cut into the compound semiconductor RF OEM market, which is expected to rise and grow rapidly. We raised the profit forecast. It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be 620 (+ 0.42) / 942 (+ 1.52) / 1173 (+ 179) million yuan respectively, corresponding to EPS of 1.35/2.06/2.57 yuan / share respectively, corresponding to the current PE valuation of 89 / 58 / 47 times respectively, maintaining the “buy” rating.
Risk warning: the downstream demand is less than the expected risk; The company’s new product R & D progress is less than the expected risk, and the new product introduction progress is less than the expected risk.
