The company released its mid-2022 report. 22H1 achieved revenue of 1.702 billion, yoy 50.83%, return net profit 531 million, yoy 172.99%, deducted non-return net profit 519 million, yoy 220.88%. 22H1's comprehensive gross profit margin was 65.00%, an increase of 9.77pct over the same period last year. Among them, 2022Q2 achieved revenue of 927 million, yoy47.85%,mom 19.43%, net profit of 298 million, yoy 175.68% and non-return net profit of 293 million, yoy 223.28% and 29.35%, respectively.
Multi-product lines work together. 22H1 achieved comprehensive growth in multiple product lines, of which sales of security and identification products increased by 23.57% compared with the same period last year, including financial social security chips of intelligent security series, logical encryption chips of RFID and sensor series, high-frequency RFID tag chips and high-frequency reader chips of intelligent identification series. The three product lines of non-volatile memory, NOR FLASH, SLC NAND FLASH and EEPROM, are affected by certain industries, but the number of customer orders in highly reliable applications is still steadily increasing, with 22H1 sales up 33.80% year on year. Smart meter business benefited from mass production of new products and high market share of dedicated MCU chips, sales increased by 177.86% compared with the same period last year. Due to the maturity of related technology and meeting customer requirements, the demand for FPGA and other chips increased significantly, and sales increased by 120.84% compared with the same period last year.
High R & D leads to breakthroughs in many fields. The company attaches importance to R & D investment, 2022H1 R & D investment totaled 399 million, an increase of 22.17% over the same period last year, accounting for 23.42% of the total revenue. The company has achieved key technological breakthroughs in many fields: 22H1 successfully completed the first Grade1-level high-capacity EEPROM AEC-Q100 verification of vehicle specifications, and at present, a number of EEPROM, NOR and NAND have entered the vehicle specification verification; in the field of MCU chips, the company has completed the development and streaming of 12-inch 55nm and 90nm embedded flash memory process platforms, and the company expects 22H2 to launch a number of 12-inch high-performance industrial and automotive specification products. In the field of FPGA, many key technologies such as ultra-large-scale FPGA architecture technology and programmable device compiler technology have been broken through. At present, a new generation of billion-door FPGA products are being developed. At the same time, the company's PSoC products have been successfully mass-produced and are currently in the stage of small batch trial.
FPGA chip production and sales are booming, high-end volume to create a new growth pillar. According to Frost&Sullivan, in the future, with the vigorous development of AI and 5G technology, the demand of emerging markets will continue to grow. The size of the FPGA market is expected to reach about US $12.58 billion in 2025 and about 16.4% of CAGR in 2025. China's FPGA market will reach 33.22 billion yuan in 2025. Domestic FPGA manufacturers have made technological breakthroughs and are expected to accelerate growth and replace them in the future. The company is in a leading position in the field of domestic FPGA chip design, and its products are mainly used in highly reliable fields with strong profitability. The company is actively promoting the development of 1 billion door-level products of the new generation of 14/16nm, and further enriching the variety of 28nm FPGA and PSoC chips to expand new markets. By the end of 2021, the company has cumulatively sold 28nm related FPGA products to 300 + customers.
The business line blossoms at many points, and the field of application continues to expand. The company makes joint efforts in many fields, such as security and identification chip, non-volatile memory, intelligent meter chip and FPGA, etc., and the revenue of related technology and products is eye-catching. In the downstream field, the company actively develops industry, automobile and other fields. We expect revenue of $36.47, $48.54 million, $6.311 billion, net profit of $9.80 million, $1.331 billion, and $1.718 billion, corresponding to PE51.9/38.2/29.6x, to maintain a "buy" rating.
Risk tips: lower-than-expected demand and technological friction between China and the United States.