\u3000\u3000 Gigadevice Semiconductor (Beijing) Inc(603986) (603986)
The company released the performance forecast: 1) 2021: it is expected to realize the net profit attributable to the parent company of RMB 2.28 ~ 2.42 billion, with a year-on-year increase of 158% ~ 175%. The net profit deducted from non parent company was RMB 2.17 ~ 2.31 billion, with a year-on-year increase of 290% ~ 315%. The performance forecast data has considered the impairment loss of goodwill, but at present, it is only the preliminary calculation result, and the final result remains to be evaluated. The non economic in 2021 decreased by about 213 million yuan compared with the same period last year, mainly due to the recognition of about 226 million yuan of income from performance compensation in 2020. 2) 21q4: the net profit attributable to the parent company is expected to be 630 ~ 770 million yuan, with a year-on-year increase of 204% ~ 271% and a month on month increase of – 27% ~ 10%. The net profit deducted from non parent company was RMB 600-740 million, compared with – 20 million in the same period last year, with a chain comparison of – 27% – 10%. The month on month decline was mainly due to Q4 bearing more expenses and goodwill impairment losses.
In recent months, the price of MCU representative products of the company has been relatively stable on the whole, and the price has been strong in recent weeks: from 2021 to 2022, the contribution to the company’s performance increment is mainly MCU business. We regularly focus on tracking the retail price change trend of 63 MCU products of the company, in order to track the change of MCU business of the company. In addition, as the leader of 32-bit MCU in mainland China, the price change also reflects the overall prosperity of the industry. In the past month (2021 / 12 / 12-2022 / 1 / 24), the retail price of M23 series positioned at the low end has loosened, but the prices of M3 and M4 series with rich models and positioned at the middle and high end are generally stable, reflecting that the company’s MCU products and MCU industry still maintain a high outlook. By product: 1) M23 series: the whole series is positioned at the low end. Among the six product models tracked, the prices of four products have been loose in the past month, and the prices of the other two products are stable. 2) M3 series: it is applied in high, middle and low end. Among the 25 product models tracked, the price of 6 products has decreased in recent month. Among them, the overall price of five high-end products was strong, only one was reduced, the price of three of the 11 middle-end products decreased, and the price of two of the nine low-end products decreased. 3) M4 series: it mainly focuses on medium and high-end products. The number of tracked models is 32. There are 30 high-end + middle-end models and only 2 low-end models, of which 8 products are reduced and 1 product is increased. The prices of 2 of the 11 high-end products decreased, 5 of the 19 middle-end products decreased, the price of 1 model increased by 75%, and the price of 1 of the 2 low-end models loosened. In the past week (2022 / 1 / 19-2022 / 1 / 24), the prices of all products of M23, m3 and M4 series have been strong without fluctuation during the week.
As a dual leader in the mainland storage + MCU industry, the company will continue to benefit from the dual logic of “localization” + “product structure optimization” in 2022. 1) Nor business, the third largest in the world and the leader in the mainland, continues to optimize the company’s product structure due to the distribution of storage capacity, application fields and processes. From the perspective of storage capacity, according to the data of WSTS, the proportion of global 512MB and above, 256MB and 128MB in the overall nor sales amount is 40% + / 20% + / 20%. High capacity products have high added value and high barriers. The company continues to upgrade to high capacity, resulting in the optimization of product structure. In terms of application fields, according to the data of Maia research, the proportion of global communication, consumer electronics, automobile and industry in nor downstream application market is 30%, 26%, 18% and 12% respectively. Automobile and industry demand high stability of products. The market is still occupied by us fair and Plath, China Taiwan Wang Hong and Hua bang. The company continues to develop automotive and industrial applications, bringing product structure adjustment. From the perspective of OEM process, the world’s leading Huabang has entered the 48nm process in 2016. Wanghong, the second largest manufacturer, entered the 48nm process in 2018. Both Meguiar and cypress entered the 45nm process in 2018. At present, Zhaoyi has upgraded from 65nm to 55nm, resulting in the improvement of cost and production capacity. 2) MCU business, the 32-bit leader in the mainland, continues to benefit from the low self-sufficiency rate of the local market, and the upgrading of products to industry and automobile continues to bring structural optimization. From the perspective of self-sufficiency rate, according to Gartner data, in 2020, 84% of the global market share was monopolized by seven giants such as Renesas, NXP, microchip and Infineon. The monopoly shares of overseas giants in the automotive, industrial and consumer electronics markets were 95%, 84% and 65% respectively. The self-sufficiency rate in the mainland was low. As a 32 leader, the company led the wave of localization. In terms of application fields, the main application markets of the company in 2020 are consumer electronics markets such as balance car, UAV and sweeping Siasun Robot&Automation Co.Ltd(300024) . The industrial proportion has increased significantly in 2021, and it is expected to continue to increase in 2022. In November 2021, the company’s vehicle specification MCU chip was successfully streamed and has been provided to customers for verification, which is expected to generate revenue quickly. From the distribution of arm cores, among the 370 products announced on the official website, the number of low-end M23 / middle-end m3 / middle-end M4 / middle-end and high-end M33 cores is 27 / 174 / 134 / 21 respectively, which is in a leading position in the mainland, but there is still much room for improvement in the number of models and high-end degree of cores compared with overseas giants. 3) DRAM business has a very low self-sufficiency rate in the mainland, and self-research has developed rapidly. According to the data of WSTS and statista, in 2020, the global niche DRAM was US $6 billion and the mainstream DRAM was US $60 billion. The mainland was the largest market in the world, accounting for more than 40%. Changxin mass production broke the situation that the self-sufficiency rate of the mainland was zero. The company has launched its self-developed product 19nm4gbddr4 in June 2021, aiming at TV, security camera, automotive application and other markets. The initial customers include set-top box, IPTV and security camera. In addition, we are actively developing new products. According to the company’s announcement, it is estimated that 860 million yuan will be purchased from private brands and 1.08 billion yuan will be purchased from DRAM on a commission basis in 22 years; From January to November of 21, the actual amount of self-developed procurement and OEM was only 189 million, with a leap year-on-year growth. According to the calculation that wafer foundry accounts for 75% of the total manufacturing cost and 30% of the gross profit margin, the corresponding revenue is 1.6 billion yuan, and self research has developed rapidly.
Investment suggestion: it is estimated that the net profit in 2021, 2022 and 2023 will be 23.1/32.2/4.03 billion yuan respectively, and the corresponding PE will be 45 / 32 / 26 times. Considering that the company is the double leader in the mainland storage + MCU industry, under the background of localization, there is strong downstream demand, continuous optimization of product structure, both scarcity and growth, and maintain the “buy” rating.
Risk warning event: the prosperity of MCU and nor may be lower than expected, and the OEM cost increases. The company cannot bring the risk of pressure on gross profit margin through product structure adjustment or price increase.
