Everbright Securities: Gives Jingchen shares a buy rating

2022-04-10Liu Kai of Everbright Securities Co., Ltd. conducted a study on Jingchen shares and released a research report "Tracking Report No. 5: 22Q1 Performance Exceeds Expectations, SoC Main Chip Giant Accelerates Growth", this report gives a buy rating to Jingcheng Shares, and the current stock price is 115.3 yuan.

Jingchen Co., Ltd. (688099)

event:

On April 8, 2022, the Company issued the Voluntary Disclosure Announcement for the First Quarter of 2022 Results.

Comments:

22Q1 results exceeded expectations. 22Q1 Operating income of about 1.48 billion yuan, an increase of about 59.29% year-on-year; attributable net profit of about 270 million yuan, an increase of 201.80% year-on-year, net interest rate of 18%; deduction of non-attributable net profit of about 256 million yuan, an increase of about 226.88% year-on-year, deduction of non-net interest rate of 17.3%. Compared with 21Q4's revenue of 1.545 billion yuan, net profit of 312 million yuan and net profit of 286 million yuan, the company's 22Q1 off-season performance is close to the 21Q4 peak season performance, and we are optimistic about the growth trend of Jingchen in 2022 and the future.

Multi-point blossoming, business at home and abroad is progressing smoothly, and there is a broad space for growth. The company vigorously expands overseas markets while consolidating the domestic market. In 2020, the global market of smart set-top box SoC chips, smart TV SoC chips, Wi-Fi and Bluetooth chips shipped about 350 million, 250 million and 3.20 billion units respectively, and The shipments of Amlogic shares were about 57.89 million, 29.08 million and 30,000 units, with a global market share of only 16%, 12% and less than 1%; the global market space of the three major product lines was about 35, 13 and 20 billion US dollars, totaling about 25 billion US dollars, compared with the current revenue volume of Jingchen, the future growth space is huge.

Smart set-top box SoC chip: Overseas market expansion is accelerating, and the market share in the Chinese market has increased. The company's series of products for the domestic operator market after years of continuous innovation and upgrading, product performance, stability advantages are obvious; the series of products for the overseas operator market has obtained Google certification and a number of international mainstream Condition Access System (CAS) certification, support AV1 decoding; for domestic and foreign non-operator customers a wide range of product types, according to different customers and markets for product performance, process technology needs, Covering the high, medium and low markets. The company's smart set-top box chip solution is widely used by ZTE, Skyworth, Xiaomi, Alibaba, Google, Amazon, Walmart and other well-known manufacturers at home and abroad, and related terminal products have been widely used in domestic operator equipment such as China Mobile, China Telecom, China Unicom and many overseas operator equipment in North America, Europe, Latin America, Asia Pacific, Russia, Africa and so on.

Smart TV SOC chip: Continue to launch leading products, which are widely used by downstream customers. 2K Full HD cost-effective series products support 4K Ultra HD decoding, ultra-high system integration; 4K Ultra HD series products support 8K Ultra HD decoding, far-field voice and Dolby sound effects; high-end series products have built-in neural network processors, support far-field voice upgrades and Dolby Vision, and support artificial intelligence-based picture quality optimization technology. The company's smart TV chip solutions have been widely used in smart TVs, projectors and other fields, related applications include but are not limited to Xiaomi, Haier, TCL, Skyworth, Jimi, Fengmi, Ali, Tencent, Baidu, Bigeye Orange, Anker, Best Buy, Toshiba, Amazon, Epson and other well-known enterprises at home and abroad intelligent terminal products, follow-up will continue to launch new products, further expand the incremental market and customers.

AI audio and video terminal chips: diversified application scenarios, embracing the global ecosystem of AIoT. The company's application scenarios of such chip solutions are rich and diverse, covering but not limited to smart home (smart speakers, smart doorbells, smart images), smart office (intelligent conference system), smart fitness (treadmills, spinning bikes, fitness mirrors), smart home appliances (sweeping robots, refrigerators), drones (smart agricultural drones), smart business (face brush payment, advertising machines), smart terminal analysis boxes (rookie warehousing, station back-end analysis boxes), intelligent singing (K song on demand machines) and other fields. The company's chips have been applied to the terminal products of many well-known enterprises at home and abroad, including but not limited to Xiaomi, Lenovo, TCL, Alibaba, Ledong, Jifei, iQiyi, Google, Sonos, JBL, Harman Kardon, Yandex, Keep, Zoom, Fiture, Marshall, etc.

WIFI Bluetooth chip: continuous technological breakthroughs, improve the product matrix. Since the mass production of 20Q3, the company has steadily promoted its commercialization process, and continuously optimized and upgraded its technology, in August 2021, the company launched the first self-developed dual-frequency high-speed data transmission Wi-Fi 5 + BT 5.2 single chip that supports high-throughput video transmission, which can be sold with the company's SoC main chip to optimize the product portfolio. The launch of this product has laid a solid foundation for the launch of the company's next-generation WiFi Bluetooth chip.

Automotive electronic chips: cooperate with high-end customers to develop intelligent cockpit systems. The company made positive progress in cooperation with overseas high-end high-value customers in 2020 and received some customer orders. In the first half of 21 years, the company continued to invest in the field of automotive electronic chips, and the company's automotive electronic chip sales increased steadily in the first half of the year. At present, these chips are mainly used in in-vehicle infotainment systems, and the products adopt the industry-leading 12-nanometer process technology, built-in neural network processor, support graphics, video, image processing and far-field voice functions, support AV1 decoding, and meet the requirements of vehicle specifications.

Earnings forecasts, valuations and ratings. Based on the Company's 2021 Results Express, we adjusted the Company's 2021 revenue and net profit to $4,778 million and $814 million. We believe that the increase in overseas business, the recovery of domestic business demand, and the tightening of supply and demand have led to rising prices to drive the high growth of Jingchen's future performance. We revised our company's net profit attributable to the parent for 2022 and 2023 to 1.212 billion yuan (+20%) and 1.590 billion yuan (22%), compared with the original forecast of 1.008 billion yuan and 1.302 billion yuan. We expect the company's revenue for 2021-2023 to be 47.78/65.33/8.530 billion yuan, net profit attributable to the mother to be 8.14/12.12/1.590 billion yuan, and pe of the current market value to be 58/39/30 times, respectively. Maintain a "Buy" rating.

Risk warning: Overseas shipments of set-top box chips are less than expected, and the development progress of Wi-Fi chips is less than expected.

According to the research report data released in the past three years, the Securities Star Data Center calculated that the team of researchers of Orient Securities Had a deeper study of the stock, with an average forecast accuracy of 70.36% in the past three years, and its forecast for the net profit attributable to the year 2021 was 782 million yuan, and the forecast PE converted according to the current price was 60.68.

The latest profit forecast breakdown is as follows:

A total of 13 institutions have given ratings, 12 buy ratings and 1 overweight rating in the last 90 days; the average target price of institutions in the past 90 days has been 159.71. The Valuation Analysis Tool of Securities Star shows that Jingchen Shares (688099) has a good company rating of 4 stars, a good price rating of 1.5 stars, and a valuation comprehensive rating of 2.5 stars. (Rating Range: 1 ~ 5 stars, maximum 5 stars)

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