Event Overview
The company released the 2020 performance report and the first quarter performance report in 2021, the company realized income of 809 million yuan and net profit of 33 million yuan in 2020, and revenue of 236 million yuan and net profit of 10 million yuan on Q1 in 2021.
With the continuous iteration of new products, the improvement of Q1 gross profit margin in 2021 is obviously accompanied by the increasing demand of WiFi technology in consumer electronics, Internet of things (smart home, smart city) and other areas. according to the statistics of electronic enthusiasts, the domestic WiFi chip market is expected to be close to 27 billion yuan in 2023 and about 21.08 billion yuan in 2021. At present, it is mainly WiFi 4 take 5 chips, while WiFi 6 chips are still in the initial stage of penetration. With the increasing popularity of the WiFi 6 standard, from the giant's release of supporting WiFi 6 smart terminals to Huawei and TP-LINK releasing WiFi 6 standard routers and then infiltrating into the Internet of things, the proportion of WiFi 6 chips is expected to reach 90% and maintain rapid growth by 2023. We believe that the initial iteration of new and old products has an impact on the company's gross profit margin, the demand of the ETC rear loading market slows down in 2020, and the ETC front chip device is supported in 2021. The company's national standard ETC SoC chip has obtained the vehicle regulation certification, entered the automobile front loading market, and is in a leading position in the technology and market. In addition, in the Bluetooth audio business sector, in order to cope with product competition and increase market share, the company adopted a competitive price strategy for the previous generation of Bluetooth audio chip products in 2020, and the gross profit margin of related products was low. pulled down the company's overall gross profit margin. Q1's quarterly gross profit margin in 2021 was 25.28%, 10.75 percentage points higher than the 14.53% of Q4 in 2020. We believe that with the continuous introduction of new products and iteration of old products, the level of comprehensive gross profit margin is expected to increase gradually. The terminal customers of the company's wireless data transmission products include Midea, Graffiti Intelligence, Jinyi Technology, Leiber Technology, DJI Technology and other domestic well-known enterprises, while the end customers of wireless audio products include Motorola, LG, Sharp, Philips and Alibaba.
Strengthen R & D investment, product innovation and upgrading
Most of the company's core teams come from top foreign universities and scientific research institutions, such as Yale University, UCLA, Kyoto University, AT&T Bell Laboratories and so on. They all have overseas study experience in the microelectronics industry and are experts in the field of integrated circuit design. As of December 31, 2020, the company has 222 employees, of which 192 are R & D personnel, accounting for 86.49%. From the perspective of R & D expenditure, the company's R & D expenditure in 2020 was 122 million yuan, an increase of 23.44% over the same period last year. Q1's quarterly R & D expenditure in 2021 was 42 million yuan. While the company continues to strengthen its R & D investment, it carries out new product planning based on market demand and improves the conversion rate of the company's R & D investment. According to the announcement of December 25, 2020, Eneng Industries paid 67 yuan per transferee for 8.34 million shares. According to the announcement of January 12, 2021, the company has set an additional issue price of 65.00 yuan per share and issued 11.7114 million shares, of which the company's existing shareholder, Shanghai Wuyuefeng Integrated Circuit Equity Investment Partnership (limited partnership), holds 3.74 million shares of the issuer, accounting for 2.70% of the total share capital before this issue. According to the simplified equity change report disclosed by Shanghai Zhineng Industrial Electronics Co., Ltd., Shanghai Wuyuefeng Integrated Circuit Equity Investment Partnership is a concerted actor of Shanghai Zhineng Industrial Electronics Co., Ltd. Therefore, after Shanghai Zhineng Industrial Electronics Co., Ltd. has completed the registration of this issue and the previously agreed transfer of shares, those acting in concert with it will hold a total of 18.23 million shares of the issuer, accounting for 12.12% of the total share capital after the issue.
Investment suggestion
Based on the fact that the company's ETC afterloading chip shipments are reduced, the competition for Internet of things-related products is fierce, and the comprehensive gross profit margin of old products is lower than that in 2019, but the future gross profit margin is expected to improve quarter by quarter. We adjust our previous profit forecast and expect the company to achieve revenue of 1.25 billion yuan, 1.65 billion yuan and 2.15 billion yuan from 2021 to 2023 (the previous data for 2021 and 2022 are 1.25 billion yuan and 1.75 billion yuan, respectively). The net profit of shareholders belonging to the parent company is expected to be 161 million yuan, 257 million yuan and 330 million yuan (the previous forecasts for 2021 and 2022 are 183 million yuan and 253 million yuan, respectively). We maintain the previous "overweight" rating.
Risk hint
The development of the semiconductor industry is lower than expected; the company's technological innovation is lower than expected, resulting in lower-than-expected breakthroughs in new products; downstream application expansion and customer expansion are lower than expected.