Zhaoyi Innovation (603986) 2019 Third Quarterly Report Review: Q3 Performance Exceeds Expectations NORFLASH continues to pick up
In the third quarter of 2019, the company’s performance exceeded expectations, and subsequent sales of products such as NOR Flash rebounded. The expected performance is expected to continue.
The company is a domestic manufacturer of high-quality memory chips, MCUs, and under-screen fingerprints. It is an important domestic memory platform in the medium and long term. R & D continues to grow and deserves special attention.
Are we up for 2019?
The EPS forecast for 2021 is 2.
36 yuan, maintain “Buy” rating.
Q3 performance exceeded expectations, and NORFlash continued to pick up.
The company’s 2019Q3 revenue was 10.
2.0 billion, previous / mom +62.
97% / + 34.
31%; net profit attributable to mother 2.
6.2 billion, previous / mom +98.
21% / + 77.
39%, exceeding market expectations.
The third quarter is the traditional peak season, which continues to benefit from the demand for NOR Flash since the second quarter. The price has picked up a strong trend and expanded new customers.
The company’s 2019Q3 sales / management / R & D / financial expense ratios increased by +0 respectively.
54 points / -0.
81pct / + 0.
49pct / + 0.
43pct, the overall period expense rate +0.
64pct; gross margin / net margin are 40.
58% / 26.
20 pieces / + 4.
Core businesses such as storage and MCU are actively explored to benefit from increased market demand + increased market share.
In terms of business: 1) In terms of NORFlash, it has benefited from the incremental outbreak of the TWS market.
The company launched the industry’s smallest packaging and low power consumption product line, to provide customers with Airpods, Android expansion and other manufacturers.
55nm products are close to mass production, which will further reduce costs and reduce packaging.
According to Web-FeetResearch, the company ranked No. 5 globally in 2018 with a market share of 10.
9%, ten years +0.
4pct, second only to Wanghong, Winbond, Cypress and Micron.
For NANDFlash, 38nm SLC has been in mass production and will further promote 24nm products.
2) The microcontroller (MCU) successfully developed the world’s first RISC-V architecture MCUGD32V series, which covers the fields of the Internet of Things, industrial control, and intelligent terminals.
The company will launch new series of wireless MCU, power 四川耍耍网 management chip and so on.
According to IHS Markit, the company ranks third in the Chinese MCU market with a market share of 9.
4%, ten years +3.
4pcts, second only to STMicroelectronics and NXP.
3) Siliwei started consolidation in June 2019. It is expected that the under-screen fingerprint chip will expand smoothly at Huawei, and the expansion is expected to exceed 15 million.
The company has also made progress in the development of large-area TFT products and MEMS ultrasonic fingerprint sensors.
R & D investment continues to increase, and vigorously promote the industrialization of DRAM.
2019Q3 company R & D expenses1.
30,000 yuan, +71 a year.
The continuous technical research and development momentum is full.
On October 1st, the company issued a plan for non-public offering of shares, and plans to raise funds43.
24 megabyte DRAM chip research and development and industrialization project, research and development of DDR3, LPDDR3, DDR4, LPDDR4 series DRAM chips under 1Xnm level (19nm, 17nm) process.
The company continues to promote DRAM projects, penetrate the mainstream memory chip market, and catalyze the domestic replacement of storage. It is of great significance and has long developed into a domestic leader in high-end general-purpose storage.
DRAM and other product development risks; market development risks; market potential risks.
Earnings forecast, estimation and investment grade: The company is a domestic high-quality company with coexisting storage chips, MCUs, and under-screen fingerprint recognition design capabilities. The DRAM project has opened up hundreds of billions of medium and long-term space.
As the company’s third quarter results exceeded expectations, we raised the company’s EPS forecast for 2019/20/21 to 2.
36 yuan (pre-adjustment forecast 1).
The company has a CAGR of 38 for three years.
7%, considering the high growth of the business, maintain the “Buy” rating.