Events:

On July 26, the company issued a forecast of H1 performance in 2022, with expected revenue of 200 to 210 million yuan, an increase of 42.1 percent to 49.19 percent over the same period last year, and expected return net profit of 0.58 to 63 million yuan, a year-on-year increase of 1732 percent to 1890 percent. Deducting non-return net profit of 1700 to 21 million yuan, an increase of 2260 to 26.6 million yuan over the same period last year, turning losses into profits.

Comments:

Revenue has grown steadily and profits have improved significantly. The company's Q2 is expected to have a median revenue of 155 million yuan, an increase of 35.96% over the same period last year and 211.24% month-on-month growth. Although the company's logistics and personnel were affected by the epidemic in the first half of the year, and customer sales revenue in some major demand areas was delayed, revenue still grew steadily in each quarter. The company's Q2 is expected to achieve a median return net profit of 60.5 million yuan, a year-on-year increase of 196.87% and a month-on-month increase of 196.87%. It is estimated that Q2 deducts the median non-home net profit of 34.92 million yuan, turning a loss from a year on year to a profit compared with the previous year. Benefiting from the continuous optimization of the company's product structure, stacking sufficient orders on hand, the annual revenue and profit can be increased.

Actively introduce into the field of automotive electronics and accelerate the localization of automotive chips. The company regards automotive electronics as a key area of development in the future, successively laying out five major automotive electronic application directions, including body control chip, engine control chip, domain controller, new energy battery BMS control chip and vehicle network safety chip, of which the car body control chip has been ordered by the whole vehicle factory and Tier1 module manufacturers for more than 2 million chips; engine control chips have been transformed from major national demand areas to the passenger car market. Active research and development of domain controllers and battery management control chips has been in the process of streaming; three automotive electronic safety chips have been launched to gradually expand the influence of the domestic vehicle regulation safety chip market. Under the background of lack of automobile core, the company is expected to seize the relevant market share and promote the process of localization of automotive chips.

Continue to deepen cloud security chips and continue to expand product layout. While vigorously developing the field of automotive electronics, the company will maintain its technical advantages in the "cloud-to-end" security market, continue to expand the Xinchuang market, and develop more security application chips based on the RISC-V instruction set. At the same time, the Raid chips needed for intelligent storage control are developed to form a perfect product layout.

Cover for the first time, giving a "buy" rating. We are optimistic about the rich technical strength accumulated by National Core Technology in undertaking the country's major demand, and are expected to continue to make efforts in the areas of automotive electronics and cloud security with high demand, so as to achieve rapid growth in revenue and profits. It is estimated that the revenue of the company from 2022 to 2024 is 8.83 billion yuan, the net profit is 1.86 million, and the corresponding PE is 45.52 million, 34.54 times.

Risk hint: product development is not as expected, security chip demand is not as expected, valuation and profit forecast is not as expected.