Incident: The company released its 2022 semi-annual report. The company achieved operating income of 1,102 billion yuan in the first half of 2022, an increase of 30.35%; net profit attributable to owners of the parent company was 171 million yuan, an increase of 21.69% over the previous year; net profit after deducting non-return to the mother was 153 million yuan, an increase of 16.13% over the previous year.
Looking at the Q2 quarter alone, Q2 2022 achieved revenue of 729 million yuan, +29.48% year on year, +95.44% month on month; achieved net profit of 130 million yuan, +15.04% year on year, +217.07% month on month; net profit of non-return mother was 126 million yuan, +16.67% year on year, +366.67% month on month.
22H1 revenue increased sharply year on year, and Oleitong's one-time incentive affected profit performance: the company's revenue increased sharply in the first half of the year, mainly due to the company's increased development efforts for domestic and foreign customers. Among them, consumer electronics, automotive electronics, and semiconductor testing equipment all grew significantly. In terms of profitability, 22H1's gross profit margin and net interest rate were 55.96% and 15.96% respectively, which were +2.13pct and -1.11pct respectively over the previous year. The 22H1 company incurred financial expenses - $23 million. The main reason was the devaluation of the RMB, which generated exchange benefits. In addition, Oolitong, a subsidiary of 22H1, generated a one-time excess performance reward fee of 56 million yuan. The calculation of the incentive fee this time was mainly based on the previous performance-betting agreement for the acquisition of Oolitong (2022 was the last year of performance betting). Oolitong's one-time incentive fee dragged down the net profit of the first half of the year to a certain extent.
Leading companies have entered the market one after another, and the launch of micro OLEDs is imminent: According to Digitimes reports, Apple MR is expected to start mass production from the end of 2022 to the beginning of 2023. The upstream and downstream supply chains have already been shipped and verified in small quantities. Currently, they have entered the key stages of design verification tests and complete machine verification. Apple's MR is expected to use a Micro OLED screen, Qualcomm has also released an AR glasses reference design using a Micro OLED screen. Xiaomi officially announced the official release of the Mijia eyewear camera equipped with Sony's Micro OLED, leading consumer electronics manufacturers have entered the micro OLED market one after another. Also, according to a report by the Korean media Chosun Ilbo on July 31, Samsung Display and LG Display are planning to build a micro OLED production line with the goal of achieving mass production by 2024. Micro OLED technology attaches OLED to silicon wafers to achieve ultra-high resolution. It is currently the most suitable technology for AR/VR near-eye display, and is expected to benefit deeply from virtual reality discoveries. The company is the world's leading manufacturer of screen inspection equipment. The layout of micro OLED testing equipment is leading in the industry. Related products have been verified by well-known downstream CMOS chip manufacturers and consumer electronics manufacturers, and is cooperating with downstream customers to carry out early R&D trials for subsequent mass production of products. It is expected that the future will fully benefit from the popularization of Micro OLED in AR/VR/MR applications.
Electric vehicle testing is growing rapidly, and semiconductor SOC testers are progressing smoothly: in electric vehicles, the company has already obtained Tesla's supplier qualification, and equipment has already been delivered to Shanghai Tesla. In addition to Tesla, companies are also actively promoting cooperation with domestic first-tier electric vehicle manufacturers to meet customer needs, and the electric vehicle testing equipment business has ushered in a period of rapid growth. In terms of semiconductor testing machines, the frequency of the company's T7600 tester has reached 400MHZ, which has reached the level of mainstream mid-range SOC testers. Revenue has grown rapidly. Currently, mass production has been achieved for chip tests such as fingerprints, image sensing, and MCU, which is expected to open up a domestic alternative market space for SOC testers.
Investment advice: We expect Huaxing Yuanchuang's revenue for 2022-2024 to be 2,412 million, 3,285 million, and 4,317 million respectively, and net profit of its mother to be 327 million, 603 million, and 842 million yuan respectively, maintaining the “buy-A” investment rating.
Risk warning: customer expansion falls short of expectations, downstream demand falls short of expectations, domestic substitution falls short of expectations.