I. Overview of events
On 2021-6-18, the company announced the change of foreign investment.
II. Analysis and judgment
Consumer electronics integration continues to advance, do not change the schedule plan
The company announced a change in the divestiture plan of the consumer electronics business. In the original plan, the company and Guilin Hi-Tech and Ling Yi Chi Manufacturing respectively contributed 31Universe 270 million yuan, holding 34%, 36%, 30%, respectively, to set up Bosheng Technology, and acquired the wholly-owned subsidiary of Shenzhen Science and Technology Guilin; later, the company and Guilin Hi-Tech respectively contributed 200.320 million yuan and held shares of 48% 52% respectively, and the production plan remained unchanged, and the progress is expected to be accelerated.
Strategic development direction: storage closed testing
1) 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.
2) 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.
3) 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.
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 by 360 million, and net profit by 4%. The company continues to open up overseas markets and sets up new subsidiaries in India and Israel.
2) Medical devices: the market of ventilator customers is stable, and the volume of new products has been released. In the future, it will increase investment in household medical products, portable and chronic disease management medical devices.
3) Automotive electronics / supercapacitors: with long-term cooperation with well-known 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.
Investment suggestion
It is estimated that the company's operating income for 21-23 years will be RMB 1.84 billion respectively, and its net profit will be RMB 100 million in 10-13-15, respectively, with a corresponding valuation of 25-20-17 times. With reference to the latest TTM valuation of SW Electronics in 2021-6-18, we believe that the company is undervalued and maintains a "recommended" rating.
Risk hint
Trade frictions between China and the United States have intensified, and shipments from major customers have fallen short of expectations.