Event: the company announced that in the quarterly report of 2022, the operating income of 22Q1 Company was 786 million yuan, and the net profit of yoy47.1%, deducting non-parent was-3.28 million yuan, an increase of 42.31 million yuan over the same period last year. The gross profit margin of sales was 21.2%, which was higher than that of the same period last year. Overall, the company's Q1 performance is in line with expectations.

Main points:

Benefiting from the release of 300mm production capacity, 22Q1, the company's revenue yoy increased by 47.1%, deducting non-return net profit by 42.31 million yuan, approaching becoming a regular employee, and the performance was in line with expectations: (1) the company achieved revenue of 786 million yuan, and yoy47.1%, was mainly due to a substantial increase in product sales with the release of the company's production capacity, of which the revenue of 300mm semiconductor wafers increased by 122% over the same period last year. (2) the non-parent net profit deducted by the company is-3.28 million yuan, which is close to becoming a regular employee, an increase of 42.31 million yuan over the same period last year, mainly due to the increase in operating profit brought about by a substantial increase in revenue compared with the same period last year. However, due to the fluctuation of the fair value of the company's investment in Semiconductor Manufacturing International Corporation Ke Chuang listed stocks through the Juyuan Core Star Industrial Fund, and changes in non-recurrent gains and losses such as government subsidies recognized in the current period. As a result, the net profit of returning mother dropped to-15.152 million yuan. (3) the cash flow generated by the company's operating activities is 163 million yuan, and the yoy reaches 229.6%, which mainly benefits from the substantial increase in revenue of the company. (4) increased investment in R & D projects: the company invested 38.62 million yuan in R & D, an increase of 40.9% over the same period last year, the volume and price of products increased, and the gross profit margin of 22Q1 was 21.2%, which was higher than that of the same period last year. There is still much room for improvement.

22Q1, the company's gross profit margin performance is in line with expectations, which validates our view that "300mm wafer volume, volume and price rise promote the company's overall gross profit margin continues to rise". We continue to emphasize that the company's future gross profit margin still has a lot of room for improvement, the main reasons are: (1) the company has in-depth cooperation with customers, has passed the certification of international mainstream and domestic major chip manufacturing enterprises, and has passed the stage of low quantity and low price supply. As a qualified supplier, the product will increase in quantity and price. (2) benefiting from the process progress, the positive film rate of the company's products and the ratio of wafers used in advanced process wafer manufacturing will be increased, thus optimizing the product structure will lead to an increase in the unit price of the product; (3) the semiconductor industry will continue to be in short supply of 300mm wafers, and international manufacturers will raise prices one after another, and the company will also benefit. (4) after the release of the company's production capacity, the scale effect increases, and then the unit cost is reduced, the unit price of the product increases and the unit cost decreases, which further increases the gross profit margin.

Investment analysis opinion: the company as the industry leader, Q1 performance in line with expectations, to meet the supply and demand mismatch gold window, the full production of 300mm silicon wafer throughout the year, volume and price rise. We maintain our previous profit forecast and expect the company's 22-24 revenue to be 36.60,45.68 and 6.121 billion yuan, and its mother's net profit to be 1.71,3.87 and 624 million yuan. The current stock price corresponds to 22 years of PB3.6x and maintains a "buy" rating.

Risk hint: core competitiveness risk, market competition aggravates risk, COVID-19 epidemic situation causes the risk of short-term poor production and marketing.