Brief comment on performance
On August 28, the company announced its semi-annual report that the operating income in the first half of the year was 1.02 billion yuan, an increase of 87.2% over the same period last year, the net profit of 390 million yuan, up 337%, and the net profit of 200 million yuan, up 171%.
Business analysis
Power management chips led to a month-on-month increase in gross profit margin and an overall improvement in operating indicators: the company's gross profit margin reached 34% in the second quarter, an increase in 3.4pct compared with the first quarter. We think it is mainly due to the substantial increase in gross profit margin of power management chips in the context of short supply. In the first half of this year, the net profit margin of Nanjing Weimeng reached 25.4%, an increase of 10.7pct compared with 2020. Lingxin's micro-net interest rate reached 15.4%, an increase of 5.8pct compared with 2020. We expect that the gross profit margin of the company's power management chips will remain high in the second half of the year and is expected to continue to improve due to the continuing shortage of foundry capacity for mature process wafers. The upgrade of the product line continues to move forward, and a regulation-level LDO product has generated revenue. The ultra-low noise and high PSRR LDO used in the communications market has been successfully developed, and the proportion of industrial-grade product categories has increased by about 20%. The operating indicators improved in an all-round way, with the number of days of inventory turnover dropped to 77 days from 107 days in the same period last year, and the turnover days of accounts receivable dropped to 58 days from 61 days in the same period last year.
The sales of high-performance ADC has increased significantly, and the power product line has been improved one after another: the company's high-performance ADC chips and supporting reference source chips have made a breakthrough in the power protection market, and sales revenue has increased significantly compared with the same period last year. Power product line introduces shielded gate and super junction MOSFET and IGBT, covering 30V~1500V voltage range and 10A~150A current range, power products are expected to become an important revenue growth point.
The general manager of Nanjing Weimeng is promoted to general manager of the company, and the power management business is expected to go further: Mr. Yang Kun, the company's current deputy general manager and concurrently general manager of Nanjing Weimeng, is promoted to general manager of the company. Mr. Yang Kun has rich experience in the field of power management chips. we believe that this management change is expected to lead to the coordinated development of the three main bodies of the company's power management business, and the revenue share will increase significantly in 2021 and 2022.
Investment suggestion
We fine-tune our profit forecasts for 2021-2023 to 680 million yuan (up 7%) and 700 million yuan (9% up) to maintain our "buy" rating.
Risk hint
The risk that the progress of product development is not as expected, the risk of insufficient production capacity, and the risk that the bidding of national and southern smart meters is not as expected.
