\u3000\u3000 Hangzhou Lion Electronics Co.Ltd(605358) (605358)
Event: the company issued the announcement of annual performance increase in 2021. It is estimated that the annual 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 parent company is 547 million yuan to 597 million yuan, with a year-on-year increase of 264.20% to 297.49%.
Q4 performance continued high growth and profitability continued to improve: the annual net profit attributable to the parent company increased significantly year-on-year, mainly benefiting 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. During the reporting period, the company’s sales orders were full, the production capacity was continuously released, and the production and sales of main products increased significantly; At the same time, by optimizing the product structure and timely increasing the product price, the company’s revenue increased significantly year-on-year and its profitability improved significantly. From the Q4 single quarter, the median value of the net profit attributable to the parent company in the performance forecast was 211 million yuan, with a year-on-year increase of 197.18% and a month on month increase of 8.21%; The median net profit after deduction from non parent company is 198 million yuan, with a year-on-year increase of 235.59% and a month on month increase of 4.21%. Q4 performance is expected to continue the high growth trend. In addition, considering the gradual release of the company’s new production capacity, the further prominent scale effect and the increase of superimposed product prices, the profitability is expected to continue to improve in the future.
The gradual release of new capacity of wafer factories is expected to drive the growth of upstream silicon wafer demand: driven by the high prosperity of the semiconductor market, wafer factories have significantly expanded their production and increased their capital expenditure. At the latest performance briefing, TSMC said that it expects the capital expenditure to be between us $40 billion and US $44 billion in 2022, with a year-on-year increase of 33% to 47%. With the new capacity of the wafer factory gradually entering the release period, it is expected to drive the demand for upstream silicon wafers to increase significantly. Recently, Xinyue chemical, taishengke and sumco, the leading manufacturers in the semiconductor silicon wafer industry, successively said at the performance briefing that it is expected that the supply of large-size semiconductor silicon wafers will exceed the demand as soon as the second half of next year and 2023 at the latest. According to semi, the global silicon wafer shipment is expected to increase by 13.9% to 14 billion square inches in 2021, and the shipment is expected to increase by 6.4% / 4.6% / 2.9% to 148.96/155.81/16.033 billion square inches in 2022 / 2023 / 2024. The semiconductor silicon wafer market demand is expected to continue to grow.
The domestic substitution space for 12 inch silicon wafers is broad, and the company’s new production capacity is released smoothly: at present, most of the global semiconductor silicon wafers are monopolized by overseas companies, especially in the field of 12 inch silicon wafers, most of China needs to rely on imports, and there is huge space for domestic substitution. According to the announcement, the company’s production capacity of 6-inch and 8-inch silicon wafers has been fully released, large-scale production and sales of 12 inch silicon wafers have been realized, the technical capacity has covered the logic circuit of technical nodes above 14nm, and the power devices and image sensor devices have covered the technical nodes required by customers and have been shipped on a large scale. By November 2021, the capacity of the company’s 12 inch silicon wafer products was 20000 pieces / month, and reached 150000 pieces / month by the end of 2021. With the continuous release of 12 inch new production capacity, the company is expected to continue to benefit from the high prosperity of the industry and the trend of domestic substitution.
Power devices are booming, and RF chips are developing rapidly: in terms of power devices, according to the announcement, the production and sales of the company’s vehicle specification power device chips and photovoltaic bypass diode control chips have increased significantly, and the order volume of Schottky chips and MOS chips has far exceeded the actual maximum production capacity. With the gradual release of the production capacity of raised investment projects, the company’s power device revenue is expected to continue high growth. In terms of RF chips, according to the announcement, the company’s RF chip business has developed rapidly and actively expanded new customers. At present, the production capacity is in short supply. The production capacity of 70000 pieces / year has been built and batch shipment has been realized. In addition, the company has 360000 pieces / year of RF chip products in Haining base (including 180000 pieces / month of gallium arsenide RF chip, 60000 pieces / month of silicon carbide based gallium nitride chip and 120000 pieces / month of VCSEL chip), which has large growth space and promising prospects in the future.
Investment suggestion: we estimate that the company’s revenue from 2021 to 2023 will be RMB 2.523 billion, RMB 3.709 billion and RMB 5.193 billion respectively, and the net profit attributable to the parent company will be RMB 614 million, RMB 935 million and RMB 1.280 billion respectively, maintaining the “Buy-A” investment rating.
Risk warning: downstream demand attenuation risk, market competition risk, raw material price rise risk, and the risk that the production capacity is not up to expectations.
