Event: On October 28, 2022, the company released its report for the third quarter of 2022.
During the reporting period, the company achieved operating income of 365 million yuan (+21.89%); net profit of 45 million yuan (+3.55%); net profit of non-return mother was 39 million yuan (+17.55%).
Incident analysis:
1. The company's profits are stable and its performance has maintained high growth. In the first three quarters of 2022, the company achieved operating income of 999 million yuan (+25.46%), net profit of 123 million yuan (+22.79%); net profit of the non-return mother was 105 million yuan (+19.06%). Among them, R&D expenses were 135 million yuan, an increase of 32% over the previous year. Profit growth was slow due to rising R&D expenses. During the reporting period, the company's operating conditions were good, and various operating indicators maintained high growth. The company's main business, such as electronic ceramic cases for communication devices and ceramic consumer electronics cases and substrates, continues to grow. The company actively explores overseas markets, and its overseas business has been expanded and improved. During the reporting period, the company continued to increase investment in R&D. R&D capital mainly went to key areas and core products such as consumer electronics products, and steadily promoted the construction of production lines for consumer electronic ceramic products in order to maintain the competitiveness of the enterprise and to build the core competitive advantage of the company's products. With the growing demand for digital communications, 5G base station construction, and the trend of domestic replacement of electronic ceramic cases, the company's performance is expected to continue to grow.
2. Policies promote product upgrades, and demand for electronic ceramic cases is growing. The “Basic Electronic Components Industry Development Action Plan (2021-2023)” issued by the Ministry of Industry and Information Technology clearly states that it should target key markets such as smart terminals, 5G, industrial Internet, data centers, and new energy vehicles to promote breakthroughs in the basic electronic components industry and enhance supply chain support capabilities for key materials, equipment and instruments. The company has absolute advantages in design, process technology, and capacity expansion. The company has advanced design methods and design software platforms, and can design and develop 400G optical communication device cases, which is equivalent to the technical level of similar products abroad; the company has independent intellectual property rights in the three core technology fields of key core materials for electronic ceramics and metallized systems, semiconductor shell design simulation technology, and key technology for high-temperature co-firing of multi-layer ceramics. Furthermore, the company is also continuously promoting the construction of automated production lines, and the construction of consumer electronics fund-raising projects is expected to reach a production capacity of 4.405 billion consumer electronic ceramic products per year.
3. The acquisition plan is progressing steadily and is expected to build a first-class semiconductor manufacturing enterprise. The company announced the issuance of a share purchase asset announcement on January 29, 2022, and adjusted the plan on August 28, and issued a draft report on asset purchase capital raising and related transactions on September 22, 2022 (revised draft). It plans to purchase 73.00% of Bowei's shares held by China Telecom's 13 issued shares, the assets and liabilities of the GaN communication base station radio frequency chip business, and plans to purchase China Telecom 13, Digital Light, Smart Chip Interconnect, Telecom Investment, Tianjin Stock Development, Shunyi Innovation, China Investment, China Investment, Tianjin Stock Development, Shunyi Innovation, China Investment, China Investment Its total It holds 94.6029% of the shares of the National League of Nations Wanzhong. Among them, the above products of the 13th Electric Technology Institute are leaders in the domestic semiconductor market and have created a scarce IDM model. The company is actively promoting asset injection of GaN/SiC third-generation semiconductor modules. After this acquisition is completed, the company is expected to expand production capacity, leverage synergies with technology and customer advantages, and build a first-class semiconductor manufacturing enterprise.
Investment advice:
Driven by macroeconomic policies, growing demand for digital communications, and multiple opportunities for domestic substitution of main products, the company actively promoted various layouts. We believe the company will continue to maintain high growth in the future. It is predicted that the company's revenue for 2022-2024 was 1,326/17.72/2,276 billion yuan, an increase of 30.76%/33.70%/28.43% over the previous year. The company's net profit returned to the mother was 1.71/2.35/301 million yuan respectively, up 40.48%/37.71%/28.10% year-on-year, corresponding to EPS 0.82/1.13/1.44 yuan and PE131.52/95.50/74.55, giving a “recommended” rating.
Risk warning:
Profits in the consumer electronics sector fell short of expectations; competition in the domestic market intensified; the pandemic impacted the global electronics industry chain; policy risks.
