Gigadevice Semiconductor (Beijing) Inc(603986) high demand and rapid growth of domestic alternative driving companies

\u3000\u3000 Gigadevice Semiconductor (Beijing) Inc(603986) (603986)

Event:

The company released the annual performance forecast for 2021. It is estimated that the net profit attributable to the shareholders of the listed company in 2021 will be about 2.28 billion yuan to 2.42 billion yuan, with a year-on-year increase of 158.88% to 174.78%. The net profit attributable to shareholders of listed companies after deducting non recurring profits and losses was about RMB 2.167 billion to RMB 2.307 billion, with a year-on-year increase of 290.25% to 315.46%.

Comments:

The market demand continued to be strong, and the company's performance increased significantly year-on-year

Benefiting from the trend of intelligent terminal and localization of supply chain, the market demand continued to be strong. The performance of the company increased significantly in 2021, and the deduction of non net profit increased by about 300% year-on-year; The non recurring profit and loss in 2021 was about 113 million yuan, with a year-on-year decrease of 213 million yuan. The reason is that the performance compensation income of Sili micro was about 225.8 million yuan in 2020. In a single quarter, taking the average value of the performance forecast, the company's net profit attributable to and deducted from the parent company in Q4 was about 702 / 673 million, which decreased slightly compared with 862 / 824 million in Q3. We expect it to be mainly affected by seasonal factors and Q4 accrued expenses.

The short-term benefit is periodic shortage, and the long-term optimistic about the company's multiple product lines and the increase of domestic substitution market share

The company's products norflash and MCU both grew significantly in this round of periodic shortage, and also took this opportunity to accelerate the introduction into industries, automobiles and other fields. Looking forward to the future, the 2MB ~ 2GB capacity of norflash vehicle specification products of the company has been fully paved. With the large-scale shipment of vehicle specification MCU products, the launch of WiFi products, power management chips and other new products, the sales proportion of the company in the industrial and automotive fields is expected to increase. At the same time, it will also launch its own 17nmddr3 products this year to further enrich the company's storage product line.

Profit forecast and valuation

Considering the accelerated penetration of the company's products in the shortage environment, the simultaneous rise in the volume and price of the company's main norflash and MCU products, and the rapid growth of its own DRAM shipments, we raised the company's profit forecast for 21-23 years. It is estimated that the company's net profit attributable to the parent company in 21-23 years will be 2.294, 2.593 and 2.927 billion yuan, with a target price of 189.02 yuan, corresponding to 55 times PE in 21 years, and raised to the "buy" rating.

Risk tips

The decline of demand leads to the decline of price: the supply of capacity is insufficient, the iteration is less than expected, and the development subsidy is not sustainable.

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