Event: 1H22 achieved revenue of 1.7 billion yuan, an increase of 51% over the same period last year. The gross profit margin was 65%, an increase of 10 percentage points compared with 1H21, mainly due to product restructuring and price increases. The company achieved a net profit of 530 million yuan, an increase of 173% over the same period last year, and a corresponding net profit margin of 31%. Mainly due to the slowdown of the pace of research and development of the company due to the impact of the epidemic, the expenditure on 1H22 R & D projects except salary was lower than that of 1H21.
The company maintains a leading position in domestic FPGA chip technology, bringing future performance growth: 1H22's FPGA and other chips achieved revenue of 378 million yuan, an increase of 121% over the same period last year, accounting for 22% of the revenue from 15% of 1H21. Mainly due to the company launched in 2018, 2019 production of 28nm billion gate-level FPGA chip technology tends to mature, to meet the expectations of end customers, so the demand is increasing.
At present, the company has sold related FPGA products to more than 500 customers, which has been widely used in the field of communication, industrial control and so on. The company's new generation of 14nm/16nm billion-gate FPGA products are under research and development, and the company expects to achieve mass production in 2022 and 2023, which will further widen the technology gap with domestic FPGA chips and contribute new revenue increments. In the future, FPGA chips will become the main driver of the company's revenue growth, while FPGA chips have higher gross profit margins because of higher technical barriers, so we are expected to see the overall profitability of the company increase with the increase of FPGA revenue share.
Supply chain improvement and mass production of new products drive the rapid growth of smart meter chip revenue: the revenue of 1H22's security and identification chip, non-volatile memory and smart meter chip is 4.6 million RMB, an increase of 24%, 34% and 178% respectively over the same period last year. Although the non-volatile memory market is declining, the number of customer orders in the highly reliable area of the company has increased steadily, driving the business to maintain a good growth. The smart meter chip mainly benefits from the improvement of the supply chain and the mass production of new products. The company's first gauge-level MCU will be mass produced in 2H22; the company's MCU products have completed the development and streaming of 12-inch 55nm and 90nm embedded flash process platform, and the company is expected to gradually launch a number of 12-inch process platform based on large-capacity, high-reliability, high-performance industrial and automotive specification-grade MCU products in 2H22, which will drive the further growth of smart meter chip revenue.
Profit forecast, valuation and rating: considering the better-than-expected performance of the company's smart meter business, the return net profit of Shanghai Fudan in 2022-2024 was raised by 21% to 9.73%, with a corresponding year-on-year growth rate of 89%, 37% and 14% respectively. The company is the first manufacturer to launch 100 million-level FPGA products in China, which effectively fills the gap of domestic high-end FPGA and is in the stage of accelerating volume in the past two years. Under the tide of domestic substitution, it can effectively further seize the domestic market. At the same time, the company has started the research and development process of 1 billion-door-level FPGA products in 14/16nm process, which will further widen the gap with pursuers and maintain Shanghai Fudan (H) "buy" rating.
Risk tips: lower-than-expected demand for semiconductors; lower-than-expected volume of new products; risk of new product development and technology iteration.