Performance preview
Profit for 1H22 is forecast to increase 50-80% year-on-year
The company released its 2022 semi-annual performance forecast. 1H22 achieved forecasted net profit of 410-492 million yuan, an increase of 50-80% over the previous year; forecasted deduction of non-net profit of 213-248 million yuan, an increase of 210%-260% over the previous year. Corresponding to the 2Q22 single quarter, the company expects to achieve net profit of 167-249 million yuan, an increase of 129%-242% over the previous year, which is basically in line with market expectations.
According to the announcement, the main reason for Guimu's rapid increase in net profit was that the company received 106 million yuan in dividends from the participating company Dongguan Industrial Park, but there was no such investment income in the same period last year, which led to a significant increase in investment income compared to the same period last year.
Key points of interest
The company is actively expanding the sealing and testing capacity of storage semiconductors, which is expected to usher in a second growth curve. The company is actively expanding the sealing and testing capacity of storage semiconductors. The Hefei Payton Storage Project completed the first phase of the project in June 2021 and was officially put into operation in December. As of May 2022, it had a package testing capacity of 15,000 storage wafers. We believe that with the smooth expansion and commissioning of the company's sealing and testing capacity, the company is expected to cooperate with the business development of domestic memory chip manufacturers such as Hefei Changxin to achieve rapid growth in the sealing and testing business, and is optimistic about the increase in performance brought about by the storage semiconductor sealing and testing business.
The consumer electronics business was successfully divested, and the measurement smart terminal business made breakthrough progress domestically. In terms of the consumer electronics business, Guilin Shenzhen Technology, as a company specializing in the mobile phone business, was wholly acquired by Guilin Bosheng Technology Co., Ltd. in April 2022 and is no longer included in the company's consolidated statement. According to the company announcement, this equity transfer will have a positive impact of 16.36 million yuan on the net profit of the mother in 2022. We believe the divestment of the low-value-added consumer electronics business is expected to increase the company's profitability. In terms of measuring smart terminals, the company's smart metering business has made a breakthrough in the domestic market. Shenzhen Technology Chengdu, which specializes in measuring smart terminals, won the first pre-bid for the Class A single-phase smart meter project in the 30th batch of electricity meter procurement projects of the State Grid in 2022 in June 2022. The total number of units purchased was 150,000, and the purchase amount was about 31.88 million yuan. We believe that China Power Grid's bid breakthrough is expected to support the revenue growth of the company's smart metering business, and that the company's smart metering product R&D and production base in Chengdu was completed in December 2021 and put into operation in January 2022. The company's R&D and production capacity in smart metering products is expected to increase further.
Profit forecasting and valuation
We are optimistic about the company's expansion in storage wafer packaging production capacity, keeping the 2022/2023 net profit of 860 million yuan/1.09 billion yuan unchanged. The current stock price corresponds to 22.0 times the 2022 price-earnings ratio and 17.4 times the 2023 price-earnings ratio. Maintaining an outperforming industry rating and a target price of 14.0 yuan corresponds to 25.3 times the price-earnings ratio of 2022 and 20.0 times the price-earnings ratio of 2023. There is 15% room for improvement compared to the current stock price.
risks
Localization of memory chips fell short of expectations, and market demand for memory chips fell short of expectations.
