Twenty years of hard work have yielded a good harvest, and performance has grown rapidly
The company was founded in 2002 and has been deeply involved in the field of analog integrated circuits for nearly 20 years. The company's main products are power management chips. It has formed a complete range of products with reliable quality in the field of power management. In addition, it is also actively developing and promoting other high-performance analog chips such as intelligent networking delay management units and signal chain products. In 2021, the company achieved revenue of 774 million yuan (year-on-year growth rate of 42.50%) and net profit of 159 million yuan (year-on-year growth rate of 137.85%); 2022.Q1 achieved revenue of 265 million yuan (year-on-year growth rate of 59.32%, year-on-year growth rate of 33.11%), and net profit of 66 million yuan (year-on-year growth rate of 171.99%, year-on-year growth rate of 48.92%).
International ranking at the top, domestic substitution is accelerating
The company's main products in Samsung have become the main supplier, accounting for 40% to 60% of Samsung's purchases. The company has targeted the domestic replacement market in the past two years, and its share of domestic business has increased rapidly, from 23.8% in 2019 to 43.3% in 2021. At the same time, the company's domestic replacement of power management chips is progressing smoothly. The gross margin of domestic business is higher than that of foreign business. As the share of domestic business increased, the company's overall gross margin increased from 29.3% in 2019 to 39.0% in 2021. In 2021, the company's domestic chip revenue was about 223 million yuan, an increase of 156% over the previous year, and the gross domestic chip margin reached 45.4%, an increase of 15 pct over 2020
Precise R & D investment, double benefits with less effort and obvious benefits
The company's R&D field is relatively concentrated, which guarantees the accuracy and high efficiency of R&D. The marginal benefits of the company's R&D investment are outstanding, and it can obtain higher profits with less R&D investment. The company's net profit/R&D investment for the first quarter of 2022 was 261%, far ahead of domestic analog chip companies.
Tighten technical barriers and advance automobile chips in an orderly manner
The capital raised by the company's listing is mainly invested in high-performance power conversion and driving chips and high-performance power protection chip projects. At the same time, the company also invests less money in research and development of various projects such as signal chain chips, magnetic sensing chips, and power management units (PMU). The investment progress of various R&D lines in 2021 is progressing steadily. A number of new types of chips have been developed, including DC\ DC chips, automotive electronic chips, etc.
Some new products have already begun to be supplied, and sales of new products are expected to continue to grow after production capacity is reduced. The company's products will expand from mobile phones to automotive electronics, and actively develop and promote AC/DC, DC/DC chips for automotive entertainment systems and electronic control systems.
Investment advice
Benefiting from the company's precise R&D investment, the company's ability to generate profits is outstanding, and EPS and ROE are higher than the average values of comparable companies. As of July 27, 2022, the company's PE was 34.6 times, which is a low level in the industry, and there is a possibility that the company will be underestimated. We are optimistic that the company will accelerate the replacement of power management chips domestically, and that the rapid growth of the electronic detonator industry will bring the company a second growth space. The company is expected to achieve net profit of 268 million yuan, 365 million yuan, and 482 million yuan respectively in 2022-2024, corresponding to the current PE of 25.87, 19.05, and 14.40, respectively, giving it a “buy” rating.
Risk Reminder
Product updates are falling short of expectations; the consumer electronics industry continues to decline; the risk of increased competition in the industry