3Q21 performance meets the forecast

The company announced 1-3Q21 results: revenue was 1.82 billion yuan, down 0.9% from the same period last year, and the net profit returned to its mother was 107 million yuan, compared with 1.38 million yuan in the same period last year, corresponding to 0.20 yuan per share. In a single quarter, 3Q21 revenue was 584 million yuan, down 2.8% from the same period last year, and its net profit was 40 million yuan, down 49.8% from the same period last year. The results are in line with the previous forecast.

The gross profit margin of 3Q21 decreased, and the expense rate decreased slightly during the period. The comprehensive gross profit margin of 1-3Q21 company was 32.2%, an increase of 2.4ppt 3Q21 comprehensive gross profit margin of 29.6%, and a decrease of 3.2ppt over the same period last year.

During the period of 3Q21, the expense rate decreased 0.4ppt compared with the same period last year, in which the sales / management expense rate decreased 1.3/4.2ppt, the financial expense rate increased 5.1ppt year-on-year, and the R & D expense rate remained unchanged.

The net interest rate fell year-on-year, and the net cash outflow remained stable. 1-3Q21's net profit margin increased by 5.8ppt to 5.9% compared with the same period last year. The net profit margin of the company decreased by 6.4ppt to 6.8% compared with the same period last year, mainly due to non-operating income of 47 million yuan generated by performance compensation in the same period last year. The net cash outflow from 3Q21's operating activities was 1 million yuan, 37 million yuan less than the same period last year.

Trend of development

Medium and large size semiconductor grade monocrystalline silicon production capacity construction plan landed. On August 18, 2021, the company examined and approved the proposal of the subsidiary Zhejiang Haina to build a medium and large semiconductor silicon single crystal production base (hereinafter referred to as "single crystal base"). By the end of 3Q21, single crystal base project company Hainer Semiconductor (Shanxi) Co., Ltd. has landed in Taiyuan, Shanxi Province. We expect the project to help increase monocrystalline silicon production capacity, while lower local electricity prices will significantly reduce production costs.

Successfully developed the first domestic security IO control chip supporting SIL4 level, and planned to achieve domestic replacement.

Recently, the company announced the self-developed "Zhonghexin SIO1001", which has completely independent intellectual property rights, is suitable for rail transit safety digital acquisition and drive control, and can be extended to rich industrial scenes such as nuclear power and chemical industry, and is expected to achieve import substitution.

Profit forecast and valuation

We maintain the 2021 EPS 2022 forecast of 0.32 pound 0.40 yuan, and the company's current share price corresponds to 23.8 pound E in 2021 pound 2022. We maintain the target price of 9.23 yuan (after equity dilution is taken into account), corresponding to 2021 Universe, 2022, 29max, 23 times Pmax E, with 20% upside space. Maintain an industry rating that outperforms.

Risk

Production capacity construction is not as expected, semiconductor business volume is not as expected.