I. Overview of events
On 2021-4-30, the company released its annual report 2020 and quarterly report 2021.
21Q1: realized revenue of 3.8 billion yuan, an increase of 15% and a decrease of 13%. The gross profit margin is 7.8%, which is the same as minus 2pct and minus 2pct.
The net profit of returning to the mother was 200 million yuan, an increase of 146% and a decrease of 51%, which was at the top of the forecast range, of which the income from changes in fair value increased by 470 million yuan over the same period last year. The non-net profit of the home deduction is 60 million, which is the same as the decrease of 39% and the increase of 110%. Among them, the storage closed test capacity utilization is full, the performance increases substantially, and the loss of the consumer electronics business is a drag on the performance.
II. Analysis and judgment
20 years of high year-on-year growth
1) 2020: revenue of 15 billion yuan, an increase of 13%. The gross profit margin is 11%, which is the same as the increase of 1.8pct. The net profit of returning to the mother was 860 million yuan, an increase of 143%. Among them, smart meter, automotive electronics, medical business performance is eye-catching, hard disk business contributes stable profits, consumer electronics is a drag on performance. In addition, the investment income increased by 190 million over the same period last year (the associated company Onna Technology Group was privatized, and the company received 179 million investment income from the sale of shares. The shareholding ratio dropped to 17.785%), and the fair value change income increased by 380 million over the same period last year (mainly financial derivatives fair value change income 260 million).
The non-net profit of the mother deduction is 300 million, an increase of 90%.
2) 20Q4: realized revenue of 4.4 billion yuan, with an increase of 40% and 21%. The gross profit margin is 9.8%, which is the same as minus 2.5pct and minus 1.4pct. The net profit of returning to the mother was 410 million yuan, an increase of 43.1% and 62% respectively.
Strategic development direction: storage closed testing
1) the net profit in the past 20 years was 85 million yuan, an increase of 8%.
2) Global top, mainland first + dram/nand/ module full coverage + high-quality customers (Kingston, Western Digital, etc.) have been developed for many years, and the technical customers are all excellent.
3) Changxin + Changshun leads the mainland storage from 0-1, the company has been in the development tuyere. Changxin has a revenue volume of 100 billion yuan each after reaching production, with a planned production capacity of 360,000 pieces / 300,000 pieces per month, and Changxin / long-term production capacity is expected to quickly rise to 1280,000-100,000 pieces in 2021. At present, the company's Shenzhen plant is running at full capacity, and the Hefei plant will accelerate production expansion to provide capacity guarantee for major customers.
4) the global DRAM/NAND market in 2020 is US $652 billion, and the mainland DRAM/NAND market is estimated to be US $222,204 billion. The big market provides the company with a long-term development track.
5) the company signed the Strategic Cooperation Framework Agreement with the Hefei Economic Development Management Committee on April 2, 2020. Peyton will contribute a total of 3.06 billion yuan to Hefei Peyton with the second phase of the National large Fund, Hefei Economic Investment and China Electric Power Co., Ltd. according to the proportion of capital contribution, the proportion of equity is 55.88%, 31.05%, 9.8% and 3.27%, respectively.
Thick safety pads provide support, and traditional intelligent manufacturing provides at least about 800 million net profit. 1) Smart meters: Chengdu subsidiary's revenue in 2020 increased by 21%, net profit increased by 360 million, and net profit increased by 4%. The company continues to open up overseas markets and sets up new subsidiaries in India and Israel.
2) Communications and mobile phone business: this business has been losing money for a long time. On February 24, 2021, the company signed an "investment agreement" with Guilin Hi-Tech Group and Leiyi Zhishuang to jointly establish Bosheng Technology, with a stake of 34%, 36% and 30%, respectively. Upon completion of the new establishment, the divestiture of Shenzhen Technology Guilin will be completed, and the current plan is progressing smoothly.
3) Medical devices: the market of ventilator customers is stable, and the volume of new products will be released. In the future, it will increase investment in household medical products, portable and chronic disease management medical devices.
4) Automotive Electronics / Super Capacitor: with long-term cooperation with well-known automotive power battery system companies, multi-products achieve stable mass production, and the CAGR is expected to be 50% in the next five years. The world's largest large-capacity monomer production base, with an annual output of more than 3 million pieces.
III. Investment suggestions
It is estimated that the company's operating income for 21-23 years is RMB 1.8410 billion respectively, and the return net profit is 10-13-15 million respectively, with a corresponding valuation of 25-20-17. With reference to SW Electronics' latest TTM valuation of 45 times in 2021-4-30, we believe that the company is undervalued and maintains a "recommended" rating.
Fourth, risk tips:
Trade frictions between China and the United States have intensified, and shipments from major customers have fallen short of expectations.
