\u3000\u3000 Gigadevice Semiconductor (Beijing) Inc(603986) (603986)
Event: on January 24, the company issued a performance forecast. It is expected to realize a net profit attributable to the parent company of RMB 2.28-2.42 billion in 2021, with a year-on-year increase of RMB 1.399-1.539 billion, with a year-on-year increase of 158.88% - 174.78%.
Strong demand + capacity guarantee, and the rapid growth of performance is in line with expectations. According to the performance forecast, the company expects to realize the net profit attributable to the parent company of RMB 2.28-2.42 billion in 2021, with a year-on-year increase of RMB 1.399-1.539 billion, with a year-on-year increase of 158.88% to 174.78%. The net profit deducted from non parent company was RMB 2.167-2.307 billion, with a year-on-year increase of RMB 1.612-1.752 billion, with a year-on-year increase of 290.25% - 315.46%. The main reasons for the performance growth are as follows: first, benefiting from the trend of intelligent terminal demand and localization of supply chain, the market demand of the company's products continues to be strong; Second, relying on the product and technical advantages accumulated in the field of MCU and storage, the company continued to explore new markets and customers, optimize the product and customer structure, and increase the contribution of revenue in industrial and other fields; Third, promote the diversified layout of the supply chain, actively respond to supply shortages and provide strong capacity guarantee for performance growth.
In 2021, supply and demand are tight throughout the year, and domestic MCU leaders are expected to continue to develop in the automotive and industrial markets. The company's gd32 includes three major product lines of entry, mainstream and high performance and 28 product series, occupying the best growth track of 32-bit MCU. It has achieved rapid growth in the fields of industry, medical equipment, security monitoring, automotive instruments, entertainment video, T-box and household appliances. The field of vehicle and industrial control will be an important target market for MCU business in the global market in the future. According to Morgan Stanley research, in 2020, the global 32-bit / 8-bit / 16 bit MCU market scale was US $10.4/4/3 billion respectively, and the 32-bit MCU market scale grew rapidly, with CAGR of about 11% in recent five years. According to AFS research data, due to the shortage of chips, the global automobile market is expected to reduce the production of about 10.2 million vehicles in 2021, of which the shortage of microcontroller (MCU) semiconductor is the highest. According to the company's announcement, the company's MCU products are steadily entering the vehicle specification market. The first new specification MCU product for the general body market has been released, and it is expected to be mass produced and contribute to revenue in mid-2022. Benefiting from the needs of localization substitution, automotive intelligence and aiot, the company's MCU product structure has been continuously optimized and the richness of product matrix has been continuously improved. It is expected to continue to grow rapidly in the future.
The ballast business nor is growing steadily, and DRAM is expected to become a new growth pole. Since its establishment, the company has benefited from the withdrawal of international leading enterprises, the overall demand for nor by consumer electronics and wearable devices has been stable and the demand for high-end products has increased, and the ballast business norflash has continued to grow rapidly. With the continuous improvement of the demand for the number and capacity of memory chips in new fields such as automotive electronics, industrial interconnection and the Internet of things, nor business is expected to continue to grow steadily. The company's first private brand 19nm / 4gbdram was mass produced in June 2021, mainly for niche markets. According to the announcement of the company, DDR3, DDR4, lpddr4, 19nm / 17nm process and 1GB ~ 8GB capacity products have been planned, and 17nm DDR3 products are under active research and development. The company's self-developed DRAM products have realized the localization of design, streaming, sealing test and verification. They are mainly oriented to niche markets such as consumer, industrial control and automobile, and can be applied to many fields such as set-top box, TV, monitoring, network communication, smart home, tablet computer, on-board audio-visual system and so on. We believe that DRAM business is expected to become a new growth pole, benefiting from the increasingly improved product performance, increasingly rich product system and customer ecological effect.
Investment suggestion: we estimate that the company's revenue from 2021 to 2023 will be 8.976 billion yuan, 11.884 billion yuan and 15.687 billion yuan respectively, the net profit attributable to the parent company will be 2.329 billion yuan, 3.070 billion yuan and 3.746 billion yuan respectively, the EPS will be 3.49 yuan, 4.6 yuan and 5.61 yuan respectively, and the corresponding PE will be 45 times, 34 times and 28 times respectively, maintaining the "Buy-A" investment rating.
Risk warning: the R & D Progress of new products does not meet expectations; The process switching progress is not as expected; Wafer capacity expansion did not meet expectations; The prosperity of MCU is lower than expected; Goodwill impairment risk.
