Zhaoyi Innovation (603986) 2019 third quarterly report review: TWS drives high growth NORFLASH usher in a new round of upward period

Zhaoyi Innovation (603986) 2019 third quarterly report review: TWS drives high growth NORFLASH usher in a new round of upward period

Event: On October 29, Zhaoyi Innovation released the 2019 third quarter report.

The first three quarters of 2019 achieved operating income22.

40,000 yuan, an increase of 28 in ten years.

04%.

Realize net profit 4.

50 ppm, an increase of 22 in ten years.

42%.

Comments: 1) The performance exceeded expectations, and the Internet of Things pushed NOR memory into a new stage of growth.

The company’s revenue showed an accelerating trend on a quarterly basis, with a single-quarter revenue growth rate of 63% in 19Q3.

TWS, smart home and other IoT applications have exploded, and the company’s NOR Flash product line has entered a new round of high growth.

Since the company went public, its product mix and customer structure have continued to improve.

Along with the company’s volume of products in well-known consumer electronics customers in the United States, the company’s performance promotes accelerated growth.

Q3 performance further validates the “performance inflection point” viewpoint we raised earlier, and firmly believes that the company is leading the niche warehouse.

2) “MCU + storage + sensing” product layout is complete, forming a one-stop complete solution.

The company’s acquisition of Siliwei completed the equity transfer and the landing of the sensing business.

Silicom’s under-screen fingerprint chip achieved mass production in 2018.

The camera elements of the second-generation chip product 7001A in 2019 are from 6.

The 25um is enlarged to 8um, the recognition sensitivity is increased by 40%, and the user experience of application scenarios such as low temperature and dry fingers is improved.

Downstream mobile phone manufacturers are in urgent need of a second supplier of fingerprints under the screen.

3) Prices are not picking up, and the company’s profitability continues to improve.

Nor Flash prices recovered, and the company’s single quarter gross margin was 40 in the third quarter.

6%, an increase of 3 from the second quarter.

1 unit.

The prices of high-end applications in the products are steadily rising, and the price competition of low-end applications is fierce.

From the perspective of overseas Nor Flash suppliers, Wanghong’s gross profit margin has increased for two consecutive quarters, and the trend of Nor price recovery is obvious.

Demand-side Internet of Things and automotive applications have entered an explosive period, and the demand for Nor has expanded, and the price of Nor for medium and high-end applications is expected to continue to rise steadily.

4) DRAM domestic alternatives.

In the DRAM industry, Samsung, Hynix, and Micron dominate, accounting for more than 95% of the global market share.

The company’s DRAM project with the Hefei Production and Investment Cooperative has progressed smoothly, and a diversified research and development team structure provides protection to avoid patent blockades by foreign manufacturers.

In addition, the company will raise 43 43 trillion to invest in the research and development of 1X nano-level niche DRAM chips, further enriching its own product line.

The DRAM project with Hefei Production and Investment Cooperative is positioned as a general-purpose DRAM chip market, and the additional investment projects are positioned as a niche DRAM chip market to fully grasp the possibility of localization of DRAM chips.

Investment suggestion: In the short term, the price of Nor is stable and the upward trend is clear, and the company’s profitability is expected to continue to increase.

In the long run, the company’s product portfolio has been continuously enriched, and its customer structure has continued to improve. It has formed 北京夜网 a complete layout of “computing + storage + sensing”, forming a one-stop solution provider.

It is expected that the company’s revenue for 2019-21 will be 33.

0/44.

8/58.

300 million, net profit attributable to mothers is 7 respectively.

0/9.7/12.

0 million yuan, respectively, for the price-earnings ratio of 58/42/34 times, maintaining the “strongly recommended” level.

Risk reminders: (1) Risks of localization of memory chips are less than expected; (2) Risk of intensified trade friction between China and the United States; (3) Risk of blockade of storage equipment materials abroad; (4) Risk of patent disputes; (5) CapacityRisk of slow climbing.

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