Tianfeng Securities: Give Wingtech Technology a buy rating

2022-04-26Pan Wei of Tianfeng Securities Co., Ltd. conducted a study on Wingtech Technology and released a research report "The Big Platform Strategy Continues to Advance, "China Samsung" Is Taking Off", and this report gives a buy rating to Wingtech Technology, and the current stock price is 60.17 yuan.

Wingtech Technology (600745)

Event: The Company publishes its 2021 Annual Report. In 2021, it achieved revenue of 52.729 billion yuan, +1.98% year-on-year; net profit attributable to shareholders of listed companies of 2.612 billion yuan, +8.12% year-on-year; and non-net profit of 2.201 billion yuan, year-on-year +4.17%. The Company released its first quarterly report for 2022. 2022Q1 achieved revenue of 14.803 billion yuan, +23.44% year-on-year; net profit attributable to shareholders of listed companies was 503 million yuan, a year-on-year -22.87%; deducted non-net profit of 633 million yuan, a year-on-year -5.51%.

Comments: In 2021, the company's revenue and net profit double increased, the volume and price of the 2022Q1 semiconductor sector rose together, the ODM plate invested the profitability of the existing business in research and development to create the second growth curve in the future, and the optical plate Delta dual camera products started to supply, and the overall loss continued to decrease. Overall Q1 profit was affected by non-operating fair value changes, and operating profit performed well.

According to the public number of the semiconductor industry alliance, the company's semiconductor + optical + display + terminal business form layout has been completed, and "China Samsung" is poised to take off. Endogenous development + international mergers and acquisitions path is poised to take off, building a huge industrial layout of analog/power semiconductors + optical modules + Mini/MicroLED + intelligent terminals. The company has become the company with the most comprehensive layout from semiconductors to optics, displays and terminal products in the mainland. The first stage will form a powerful hardware traffic platform for ODM business, accelerate vertical integration in the second stage, develop more components, enhance its own supply capabilities, and form a safe and controllable supply system, and promote the company's transformation from service-oriented to product-based strategy in the third stage with semiconductors as the leader. Power devices to achieve partial domestic substitution, subsidiary Nexperia semiconductor power device shipments in 2021 ranked first in The world's sixth, 2022Q1 to achieve a rise in volume and price. The company's product structure continues to be optimized, the proportion of revenue from high-margin logic analog devices and MOSFET devices continues to increase, with the rapid increase in the penetration rate of electric vehicles, the power semiconductors for single vehicles are expected to show a multiplier level of improvement, bringing rapid growth in the industry, and the company's vehicle specification power semiconductor business is expected to enter a medium- and long-term high-speed growth stage. With the acquisition of the Newport production line to expand production capacity, the Lingang vehicle-grade fab completed the structural capping, and continued to strengthen the barriers to competition. The company's new 8-inch wafer production line at the Hamburg fab in Germany has been successfully put into operation. Nexperia has completed the acquisition of a 100% stake in the Newport fab and initiated a gradual conversion of foundry capacity to IDM's own capacity. The integration of Newport fab's capacity and processes in areas such as automotive-grade IGBTs, power MOSFETs, analog chips and compound semiconductors, and Nexperia's existing product and process capabilities, will help drive the company to seize the dual opportunities of the electric vehicle and AIoT era.

Nexperia enters the analog chip market and officially launches the new Dallas Design Center. On March 24, Nexperia announced the official opening of its new design center in Dallas, Texas. The Dallas Design Center's focus on analog signal conversion and power management ICs marks another important step toward Nexperia's goal of becoming a global leader in foundational semiconductors by 2030, which will help Nexperia strengthen and expand its portfolio of analog ICs, power management ICs, and signal conditioning ICs.

Optical modules are in the next city, delta optical imaging technology will become a major core competitiveness, has started the batch supply of dual camera products. Guangzhou Delta was originally a key subsidiary of OFILM, responsible for supplying camera modules for specific overseas customers. Relying on Wingtech product research and development and semiconductor empowerment, delta technology's optical imaging capabilities are expected to get greater room for development, with the development of optical technology and the market space in the fields of loT, intelligent cars, and meta-universes, the market space is opened, further enhance profitability and comprehensive competitiveness.

Display parts forward layout, open up core potential display tracks such as Mini/MicroLED. Mini/MicroLED has great potential for development in the consumer electronics and automotive electronics markets. The company's platform capabilities from technology research and development to product production are based on the semiconductor business IDM, giving full play to the advanced packaging and testing advantages of ANshizi's ITEC automation equipment, applying the scale in the company's product integration business, building semiconductor optics and display into the core competitiveness of the company's main business, and further promoting the deep synergy between product integration and semiconductor business. The ODM leader of smart phones is deeply bound to the head customers, the proportion of non-mobile phone business is increasing rapidly, and new products and new customers have entered the harvest period. Jiaxing, Wuxi and Kunming continued to expand production, and the utilization rate of its own capacity increased. The 5G replacement cycle accelerates the sinking of low-end mobile phones of brand manufacturers, the volume and price of ODM models rise together, the Matthew effect of the industry is prominent, the company has the advantages of leading + intelligent + market trend prediction + strong customer demand sensitivity + supply chain management ability and delivery speed, and customers cover Samsung, oppo, glory, millet, etc. The company's proportion of laptops, tablets, and servers outsourced is significantly higher than that of mobile phones, and it plans to increase the proportion of non-mobile phone business revenue from 5% to 30% by 2023. Investment advice: 2022Q1 company performance short-term pressure is mainly due to the ODM business non-mobile phone business in the project research and development, trial production and other early stages still have related expenses, the performance did not meet our original forecast, we lowered the revenue and net profit expectations, the 21-23 net profit expectations of 33.56/ 52.43 / 78.54 billion yuan down to 22-24 years to achieve 35.17 / 46.00 / 59.75 million yuan, corresponding to EPS 2.82 / 3.69 / 4.79 yuan / share, Long-term optimism about the company's future growth, maintaining a "buy" rating.

Risk warning: The downstream prosperity of semiconductors is not as good as expected, the penetration rate of new energy vehicles is less than expected, the climbing speed of new production capacity is not as fast as expected, and the risk of goodwill impairment is not as good as expected

According to the research report data released by Securities Star Data Center in the past three years, the team of MiaoFeng researchers of CITIC Securities has studied the stock more deeply, and the average forecast accuracy in the past three years is 74.34%, and its forecast for the net profit attributable to 2021 is 4.06 billion yuan, and the forecast PE is 16.67 according to the current price conversion.

The latest profit forecast breakdown is as follows:

A total of 9 institutions have given ratings, 7 buy ratings and 2 overweight ratings in the last 90 days; the average target price of institutions in the past 90 days has been 165.0. The Securities Star Valuation Analysis Tool shows that Wingtech Technology (600745) has a good company rating of 3.5 stars, a good price rating of 3 stars, and a comprehensive valuation rating of 3 stars. (Rating Range: 1 ~ 5 stars, maximum 5 stars)

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