Introduction to this report:
The 1Q22 performance fell short of expectations, but gross margin rebounded month-on-month, the company's large-scale silicon and power chip fundraising projects progressed smoothly, and future performance will usher in rapid growth.
Key points of investment:
Maintain the “increase in holdings” rating and lower the target price to 75.15 yuan. The company is actively expanding the large-scale polishing silicon wafer business and establishing a new semiconductor power chip and device company. Considering that the company's layout in the complete silicon materials industry chain is expected to bring long-term growth to the company, and 1Q22 performance fell short of expectations, the 2022-2024 EPS was lowered to 1.67, 2.27, 2.82 yuan (the original forecast values for 2022-2023 were 1.99 and 2.89 yuan), 45 times PE for 2022 was lowered, and the target price was lowered by 75.15 yuan to maintain the “increase in holdings” rating.
The 1Q22 performance fell short of expectations, and the company's core business capabilities remained unchanged. The company's Q1 revenue in '22 was 96 million yuan, YoY +12.9%; net profit of the mother was 20 million yuan, YoY -41.9%; gross profit margin was 43%, +10.04pct over the previous quarter. Affected by the price increase of upstream silicon raw materials, the company's net profit declined year-on-year; compared to 4Q21, the company adjusted its price strategy and 1Q22 gross margin rebounded sharply.
Stabilize the small-size silicon wafer market and expand the large-size silicon wafer business. The company is a domestic leader in small-sized silicon grinding wafers and is vigorously developing 6-8 inch polishing silicon wafers. In 2021, the company raised nearly half of the investment progress (48%) for the “High-end Discrete Devices and Monocrystalline Wafers for VLSI” project and is arranging equipment installation and process commissioning. It is expected that the wiring conditions will be met in late April this year, which will open up a new engine for the company's performance growth.
Actively lay out semiconductor power chips and devices to build a complete industrial chain from crystal bars to discrete device chips. In 2021, the company established Jiangsu Gaoxin. The original business was stable and orders were full. The “Production of silicon diffusers for device chips, special high voltage, and high power diodes for vehicles” was launched, creating new profit growth points.
Risk warning. Trade frictions between China and the US are uncertain; production expansion is falling short of expectations.