occurrences
Shanghai Beiling released its performance report for the first quarter of 2022: The company achieved operating revenue of 446 million yuan in Q1 2022, an increase of 4% over the previous year, achieved net profit of 144 million yuan, an increase of 3.48% over the previous year, and achieved net profit of 93 million yuan after deduction of Fumo, an increase of 22.58% over the previous year.
Key points of investment
Q1 performance was in line with expectations, gross margin reached a record high
In Q1 2022, the company's net profit after deduction increased 5.68% month-on-month, and gross margin reached a record high of 36.23%. In terms of cost rates, the cost rate for the 2021 period (excluding R&D) was 4.22%, of which the sales expenses rate was 3.02%, the management expenses rate was 3.66%, and the financial expenses rate was -2.46%. Furthermore, the company's R&D expenditure rate increased to 10.46% in the first quarter.
Power chain and signal chain two-wheel drive, accounting for more than 50% of applications in pan-industrial fields
The company's IC business is divided into 2 categories: power chain (power management, power device business) and signal chain (data converter, power special chip, IoT front-end, non-volatile memory, standard signal product business), and 7 product segments. The main target markets are network communications, mobile phones, set-top boxes, LCD TVs, high-end and portable medical equipment, security equipment, industrial control equipment, smart meters, smart wearables, the Internet of Things, 5G, automotive electronics, etc. In 2021, the company's IC products accounted for more than 50% of the pan-industrial market.
Power chain: The product has excellent performance, and vehicle grade applications are progressing rapidly. In the power management business, the company's products have excellent performance such as ultra-low noise, high PSRR, and high voltage resistance. They can target world-class analog manufacturers and are widely used in the communications market. At the same time, the company's car-grade LED driver chips have been recognized by customers and are continuing to be sold. Another LDO product that has passed vehicle regulations certification in 2020 has been shipped in batches. In addition, various power supply products have received the intended needs of automotive electronics customers, and it is expected that sales will be achieved one after another in 2022. In the power device business, the company has launched advanced shielded gate power MOS, super junction power MOS, and IGBT, which can cover the 30V-1500V voltage range and the 10A-150A current range, and has successively entered markets such as power power supply, motor control, and lithium battery protection. Among them, IGBT-related products have been designed, imported, and mass production has begun in terminals such as automobile ignition systems and vehicle air conditioners.
Signal chain: High-speed, high-precision ADCs have increased dramatically, leading the power metering SoC industry. In 2021, the company's high-precision ADC chips and supporting high-precision reference source chips made a breakthrough in the power protection and industrial control market and were widely used, and high-speed high-precision ADC/DAC sales increased dramatically throughout the year. In terms of dedicated power chips, the company has completed the comprehensive layout of the IR46 metering chip SoC chip for IoT meters (multi-core solution) and the metering chips in the State Grid/South Grid 2021 upgrade table. The overall demand for smart meter tenders from the State Grid increased 46.33% year-on-year in April 2021, accounting for the largest share of completed inspection forms. Furthermore, overseas smart meter markets are in a rapid development stage. Export orders soared in 2021, and the company's single-phase SoC chip sales to overseas smart meter markets reached a record high. According to the company's annual report, the global smart grid market is expected to reach 61.3 billion US dollars in 2023, with a compound annual growth rate of 20.9%. Within the next five years, 50 emerging markets will deploy 248.4 million smart meters, with a total investment of about 34.7 billion US dollars.
The merger and acquisition of Silicon Tower collaborates on the main business, and the 2022 development strategy is clear
On March 29, 2022, the company announced that it will invest 360 million yuan to acquire 100% of Silicon Tower Technology's shares. Silicon Tower Technology's core team members are from TI. The main products include motor (DC motors, stepper motors, DC brushless motors) drive chips, gate drive chips, Hall sensor chips, etc. It is expected that after the merger and acquisition is completed, there will be synergies with the MCU of Huada Semiconductor, the company's controlling shareholder, and the company's main power management chip and MOS power devices to provide customers with complete electrical control drive system solutions and further improve the company's IC business ecosystem. At the same time, Silicon Tower Technology promised that the cumulative audited net profit (excluding non-recurring profit and loss) for 2022-2024 will not be less than RMB 90 million.
Looking ahead, the company's development strategy in 2022 is clear: 1) Increase R&D investment in fields such as high-speed and high-precision ADC/DACs, high-performance power management chips, 650V/1200V IGBTs, IoT energy consumption sensing chips, integrated metering core SoC IoT meters, storage products, and standard signal chains; 2) Lay out product business in the automotive electronics field in a comprehensive manner to increase the sales scale of automotive-grade EEPROM, IGBT and power products; 3) Strengthen strategic cooperation/strengthen talent building/seek extended development around the main business opportunity.
Profit forecasts
The company's revenue for 2022-2024 is predicted to be 2,733, 3605, and 4,577 billion yuan respectively, and the EPS is 0.96, 1.13, and 1.35 yuan respectively. The current stock price corresponding to PE is 18, 15, and 13 times, respectively, maintaining the “recommended” investment rating.
Risk warning
The risk of declining industry sentiment, the risk of product development progress falling short of expectations, the risk of increased competition in the industry, the risk of changes in overseas policies, etc.