With the memory chip closed test business as the main growth engine, Shenzhen Technology continued to increase its performance over the past 20 years with revenue of 14.967 billion yuan (YoY:13.2%) and net profit of 857 million yuan (YoY:
143.3%), in line with the performance of KuaiBao (revenue of 14.942 billion yuan, net profit of 842 million yuan). 1Q21 revenue 3.827 billion yuan (YoY:15.2%), home net profit 200 million yuan (YoY:146.0%), mainly: 1) the overall steady development of the main business, memory chip closed test supply exceeds demand; 2) financial derivatives delivery income and fair value change income total 158 million. 1Q21 deducts non-homing net profit of 64 million yuan (YoY:-39.43%), which is mainly due to large losses in the communications business. We continue to be optimistic about the potential of the company to focus on developing closed testing of memory chips and the potential for performance improvement after the restructuring of the communications assembly business. It is estimated that in 21-22-23, the EPS will be 0.72 won 1.03 won, with a target price of 24.48 yuan, maintaining the buy rating.
The gross profit margin reached a 20-year high in 2020, attaching importance to the R & D investment support strategy. According to the annual report, the 20-year gross profit margin increased by 1.7pct to 10.85% year on year, the highest since 2001. Driven by the memory chip closed test business, the gross profit margin of the storage semiconductor business increased significantly to 14.98% year on year, and the gross profit margin of high-end manufacturing business increased 0.93pct to 6.11% year on year. In 2020, the company continued to strengthen R & D investment to support the strategic shift, with a total R & D expenditure of 255 million yuan (YoY:
22.6%), 107 new patents were applied for and 67 new patents were obtained. There was a large increase in financial expenses in 2020 (271 million yuan, YoY 255.4%), mainly due to the decrease in due delivery income of derivatives in 2020 compared with the same period in 2019 and the loss caused by foreign currency evaluation caused by fluctuations in the US dollar exchange rate. Hefei Peitun progress is expected to speed up. According to the 20 annual report, the company's memory chip closed testing business income has increased significantly compared with the same period last year. Peyton Technology, a wholly-owned closed testing subsidiary, has a revenue of 2.876 billion yuan (YoY:169.5%) and a net profit of 85 million yuan (YoY:
13.3%). In October 20, Shenzhen Science and Technology planned to raise an additional 1.71 billion to jointly invest with the second phase of the big fund to build a new Hefei Peitun Advanced Storage closed Test Plant (with a total investment of 3.07 billion yuan). According to the annual report, all parties have completed a total investment of 400 million yuan and completed an investment of 224 million yuan. According to the Hefei production and Investment News on March 5, by the end of the 20th, the Hefei Changxin 12-inch memory wafer manufacturing base project reached 40,000 pieces / month capacity ahead of schedule, and began to start 60,000 pieces / month capacity construction. we believe that at a time when the autonomy of domestic memory design and manufacturing is accelerated, the progress of Hefei Peitun, a key project of memory closure test autonomy, is expected to speed up.
Target price 24.48 yuan, maintain buy rating
Combined with the increase in operating pressure and integration costs of the communications assembly business over the past 21 years, we estimate that the company's annual return net profit in 21-22-23 will be 1.008 billion yuan, which is expected to be 28.86 times higher than the company's PE average in the next 21 years. Wind is optimistic about the growth potential of the company through restructuring communications assembly business integration and storage semiconductor closed testing business focus. Maintain 34 times the 21-year expected PE of Shenzhen Science and Technology, with a target price of 24.48 yuan (previous value: 25.75 yuan) and maintain the buy rating.
Risk hints: the epidemic situation has repeatedly led to the decline of the industry, and the progress of domestic replacement of memory is not as expected.
