Weir Shares (603501) Third Quarterly Report Review: Third Quarterly Report Meets Expectations Chip Leader Relaunches

Weir Shares (603501) Third Quarterly Report Review: Third Quarterly Report Meets Expectations Chip Leader Relaunches
I. Overview of the event On October 30, the company released three quarterly reports: the first three quarters achieved $ 9.4 billion in revenue, a long-term growth of 40%, and the net profit of the mother company1.$ 3.5 billion, an average of 45% over a ten-year period.The gross profit margin for the first three quarters was 26.6%, a 9% increase from the previous month, a net profit of 4%, and a 3% increase from the previous quarter.1pct.  Second, the analysis and judgment of performance are in line with expectations, and Howell’s new product reserves are sufficient, soaring soon. 1) The performance is in line with our judgment.The company completed the acquisition of 100% equity of Howell Technology.The 19/20/21 year commitment for the acquisition of Howell was 5 after deductions.5/8.5/11.200 million yuan.  2) The growth in the third quarter comes from the launch of new products, which will continue to accelerate in the fourth quarter: Due to the effects of privatization, Howell’s strategic development strategy is more conservative, and the mobile phone sector with a higher revenue share will decrease by 8?The 16M value is inevitable or mainly low-end rear applications.After entering the company, the company will actively adjust the product structure. The important mid-to-high-end products in reserve are: 32M beginning, 48M rear and high value-added 8M telephoto, 12M wide-angle and other products. It will begin bulk packaging in September, with excellent prices and profits.The rate is high and the competition is good. The fourth quarter is expected to expand in large quantities, which will accelerate the growth of Howell’s profits.  3) In the medium term, mobile phone cameras are fundamental to innovation, and there is a lot of room for localization: camera upgrades are the core of innovation, chips are the core of technology, and the cost is large. The industry has been monopolized by Japan and South Korea for a long time.About 40%, 20%, and 10%. Under the general trend of chip localization, Howell will enjoy the space for innovative products & replacement through new products enough to support medium-term growth.  4) Automotive, AR opens long-term growth space: Howell will be expected to become the industry leader in the second half of the security field. The automotive field is actively exploring the Japanese market. The AR field is closely following the deployment of new products by international manufacturers, and there is still plenty of room for long-term growth.The synergy of Spike and Howe is superimposed. Spike currently has alternative cost-effective advantages in the 2M, 5M, and 8M markets, and can be an excellent complement to Howe.Driven by Howe’s technology in the future, Spike will be expected to gradually make progress in research and development, saving research and development costs.In 19-21, Spike promised to deduct non-net profit of not less than: 25/45 million yuan / 65 million yuan.The macro environment affected by Weir’s headquarters gradually came out of the downturn. Weal’s headquarters’ IC design + semiconductor distribution business revenue decreased, mainly due to the trade friction in the first half of the year and the decline in component prices and business development focus.(TVS, power management IC, MOSFET, RF, etc.) Products have gradually improved since the third quarter due to the localization of Huawei and other products.  Third, the investment proposal considers the acquisition of Beijing Haowei and Spike, as well as 无锡桑拿网 the impact of equity incentive expenses and PP & A. It is expected that the net profit attributable to the mother in 19/20/21 will be 5.200 million, 21.300 million, 26.500 million yuan, the corresponding PE is 180X / 44X / 35X.  The reference SW semiconductor industry PE evaluation is 156 times, and the company PE is estimated to be only 44 times in 2020, maintaining the “recommended” level.  4. Risk warnings: 1. Fluctuations in the prices of raw materials such as wafers; 2. The acquisition and integration are worse than expected; 3. The chip prices have fallen beyond expectations