\u3000\u3000 Gigadevice Semiconductor (Beijing) Inc(603986) (603986)
Events
Gigadevice Semiconductor (Beijing) Inc(603986) release the annual performance forecast for 2021: it is estimated that the net profit attributable to the parent company in 2021 will be 2.28 billion yuan – 2.42 billion yuan, with a year-on-year increase of 158.88% – 174.78%, and the net profit attributable to the parent company after deduction will be 2.167 billion yuan – 2.307 billion yuan, with a year-on-year increase of 290.25% – 315.46%.
The performance forecast of 2021 increased significantly, benefiting from the resonance of terminal intelligence and supply chain localization
According to the calculation of the company’s annual performance forecast in 2021, the company’s net profit attributable to the parent company in Q4 in 2021 is expected to be 632-772 million yuan, with a year-on-year increase of 204% – 271%, and the net profit attributable to the parent company after deduction is 603-743 million yuan, turning loss into profit compared with Q4 in 2020. The company’s performance growth mainly benefited from the increasingly obvious trend of terminal intelligent demand and supply chain localization in 2021. The market demand of the company’s products continued to be strong. The company seized the opportunity, actively explored new markets and customers around the market and customer demand, optimized the product and customer structure, and increased the contribution of revenue in industrial and other fields; At the same time, the company continues to increase R & D efforts, continuously improve the product line, accumulate product and technical advantages, and further enhance its core competitiveness. On the supply side, the company promotes the diversified layout of the supply chain, actively responds to supply shortages, and provides strong capacity guarantee for performance growth.
Determined to move forward, three highlights will help the growth in 2022
1) flash service:
Norflash occupies the third place in the world, is the absolute leader in China, and has the leading technical ability in the industry. The demand for products related to the Internet of things, TWS Bluetooth headset, AMOLED, tddi and other mobile phone screens drives the growth of norflash market. According to the data of cinnorresearch, the market scale is expected to grow to $3.7 billion in 2022. The automotive sector will become an important growth point in the future storage market. According to IHS data, the global automotive storage IC market will be US $3.6 billion in 2019 and is expected to grow to US $8.3 billion by 2025. The 2G high-capacity products of GD55 of the company have passed the aecq-100 certification of vehicle specifications, the 2mb-2gb capacity of spinorflash vehicle specification products has been fully paved, and the whole series of gd25 vehicle specification storage products have been adopted in batches in many automobile enterprises.
2) DRAM service:
The company’s niche DRAM is a leader in China. In June 2021, it mass produced the first self owned brand 19nm4gbddr4 product for niche market. It has passed the certification of many mainstream platforms in the field of consumer applications. At present, 17nm DDR3 products are actively being developed, and there is strong demand in downstream IPTV, security, automotive applications and other markets. According to trendforce data, It is estimated that the global niche DRAM market will reach US $18.465 billion in 2023. At the same time, the company cooperates closely with Changxin storage to provide stable production capacity guarantee for the company’s DRAM products. In the future, DRAM products will become a new revenue contribution point of the company.
3) MCU service:
As a leading manufacturer of 32bitmcu in China’s MCU category “supermarket”, the company has successfully mass produced 28 general MCU series, which can provide rich functions and capacity options such as entry-level, mainstream and high performance. The company’s MCU products are steadily entering the vehicle specification market. At present, the first vehicle specification MCU product has been released, and it is expected to achieve mass production in 2022. In the process of automobile intellectualization, MCU will play a relatively important role with a wide range of applications, ranging from vehicle body control, instrument panel, on-board information and entertainment system (IVI), communication system, advanced safety system, ADAS automatic driving, to window control, electric seat, reversing radar and key, At present, the number of MCU on an electric vehicle can reach dozens, and there may be hundreds in the future. According to IHS data, the global automotive MCU market is expected to reach US $8.9 billion in 2025.
We believe that the company’s Flash + DRAM + MCU businesses have strong long-term growth drivers, and the company is expected to achieve three arrows at the same time under the era of domestic substitution, with a clear long-term growth path.
Profit forecast
It is predicted that the company’s revenue from 2021 to 2023 will be RMB 9.575 billion, RMB 13.300 billion and RMB 16.323 billion respectively, and its EPS will be RMB 358, RMB 4.89 and RMB 6.06 respectively. The corresponding PE of the current stock price will be 43, 32 and 26 times respectively, giving it a “recommended” investment rating.
Risk tips
Downside risks of industry prosperity, lower than expected progress of capacity climbing, increased industry competition, changes in overseas policies, etc.
