In the first half of 2022, in the downward period of semiconductor cycle, "soft demand, lowering prices, and destocking" has become the main theme of some categories. However, Dongxin Co., Ltd. has excellent performance against the trend.
In May 2020, investment company Hubble Technology, a subsidiary of Huawei , acquired shareholder Xin Co., Ltd., Dongxin Co., Ltd., is the second listed company after Huawei Hubble acquired shares, and Dongxin Co., Ltd. has received a shareholding in the second phase of the Big Fund investment.
Net profit expands due to reduced financial expenses?
In the first half of 2022, Dongxin Co., Ltd. achieved main business revenue of 714 million yuan, a year-on-year increase of 56.7%. The net profit attributable to shareholders of listed companies was RMB 215 million, an increase of 168.69% over the same period last year; the net profit attributable to shareholders of listed companies after deducting non-recurring gains and losses was RMB 210 million, an increase of 184.20% over the same period last year.
Figure: 2022 Dongxin Co., Ltd.'s semi-annual report
ml0 has three main reasons for the year-on-year increase in net profit:
1, sales scale has increased, and the continuous optimization of Dongxin Co., Ltd.'s products and customer structure has increased the sales share of high-value-added and high-gross profit margin products.
2, financial expenses have decreased, and affected by the large appreciation of the US dollar, the exchange income in the first half of this year is relatively large, and the funds raised generate interest income.
3, sales expenses decreased. In the first half of this year, sales expenses decreased by 10.19% year-on-year under the premise of revenue expansion.
Figure: In 2022, Dongxin Co., Ltd.'s semi-annual report
's stock price fell by 35.8%, and was "inadvertently injured"?
continues to develop rapidly in 2021. Dongxin Co., Ltd.'s performance in the first half of 2022 is still excellent, but the growth rate of net profit has declined significantly, which may be the main factor for the stock price to decline steadily.
Since Dongxin Co., Ltd. was listed on December 10, 2021, its stock price can be said to be at its peak at the beginning of its listing, and once stood at a high stock price of 52.49 yuan per share. The stock price then fell continuously, and on April 27, the stock price fell to 25.12 yuan per share. As of the close of September 30, the stock price was 28.57 yuan per share, with a market value of 12.64 billion yuan. This year, the share price of Dongxin Co., Ltd. fell by 35.8%. Another important reason for the decline in
's stock price may be that Dongxin shares are affected by the decline in the semiconductor sector.
In the first half of 2022, affected by the shrinking of the consumer market, the semiconductor sector "has been falling continuously". As of September 30, the overall semiconductor sector fell by 28.34%.
The semiconductor sector has declined severely, and Dongxin Co., Ltd. is suspected of being "inadvertently injured".
Last year, the government subsidies increased by about 9 times, and the main business had strong profitability
From the analysis of Dongxin Co., Ltd. Hexun SGI index score, the company obtained 78 points. The figure shows that the company's scores have varying significantly in the past 11 quarters, and the scores have been rising steadily since its listing, which indirectly reflects the company's development is very stable.
Dongxin Co., Ltd.'s rich product line layout also has different application fields. The current product application fields of Dongxin Co., Ltd. are mainly divided into four categories. The first category is network communication products, from 5G macro base stations to micro base stations. In the home part, it is mainly the access network part, such as home use Lightmao; it also includes Netcom products that have been applied to WiFi6 in the past year.
's second largest application is wearable devices, mainly represented by TWS Bluetooth headsets, smart bracelets, smart watches, and other market segments; the third is security monitoring , mainly for monitoring IPCs. The fourth major application is modules, mainly the application of MCP products, including 5G, cat.4 and other aspects.
In fact, after Huawei and Hubble acquired shares, Dongxin Co., Ltd. entered the road of rapid development. Driven by the dual driving of stable supply and strong downstream demand, Dongxin Co., Ltd. ushered in a booming performance in 2021. While achieving stable revenue growth, it also creates huge profits for shareholders.
Dongxin Co., Ltd.'s total operating revenue in 2021 was RMB 1.134 billion, with an annual revenue increasing by 44.62% year-on-year.
Figure: 2021 Dongxin Co., Ltd. Annual Report
Dongxin Co., Ltd.'s government subsidy included in the current profit and loss in 2021 was 9.8 million yuan, an increase of about 9 times year-on-year. In 2021, Dongxin Co., Ltd.'s non-recurring income was RMB 6.53 million, a year-on-year increase of 2.3 times. The growth of non-recurring income provides sufficient space for Dongxin Co., Ltd.'s net profit growth in 2021. The net profit attributable to shareholders was RMB 262 million, an increase of 1240.27% compared with 2020.
According to Dongxin Co., Ltd.'s 2021 annual report, the reason for the sharp increase in net profit is the scale effect:
1, Dongxin Co., Ltd. continues to shrink the process and improve yield, and at the same time continues to optimize the structure of existing products, and the sales proportion of high-value-added and high-gross profit margin increases, thus the gross profit margin has increased significantly compared with the same period last year.
2, financial expenses are reduced. In the same period of 2020, due to the large appreciation of the RMB, the exchange losses were large. In 2021, Dongxin Co., Ltd. reduced exchange losses by strengthening foreign exchange management.
Figure: 2021 Dongxin Co., Ltd. Annual Report
weighted average return on assets was 4.17% and 29.49% from 2020 to 2021, respectively. In 2021, the gross profit margin of Dongxin Co., Ltd.'s product increased by 20.67% year-on-year, with increased returns. Dongxin Co., Ltd. earns relatively high profits in net assets in 2021, and its comprehensive management level is excellent and its profitability is gradually becoming stronger.
gross profit margin increased by 20.67% year-on-year, and welcoming development opportunities
Figure: 2021 Dongxin Co., Ltd. Annual Report
memory chip is the largest segment in the entire integrated circuit market, accounting for 35.05% in 2021. With the rise of emerging fields such as automotive electronics, 5G communications, the Internet of Things, and wearables, the role of memory chips in the entire industrial chain will be more important.
From the perspective of products, in 2021, the revenue of NAND products of Dongxin Co., Ltd. increased by 65.63% year-on-year, and the gross profit margin increased by 28.67 percentage points. After years of development, the company's brand awareness and products have been widely recognized by customers. Dongxin Co., Ltd.'s NAND products' market position in the domestic market is becoming increasingly prominent, and its sales scale and profitability have gradually improved. At the same time, DRAM, MCP and technical services also increased by 68.73%, 34.19% and 30.93% respectively compared with the same period last year
From the perspective of competitive landscape, the global storage chip market is currently monopolized by overseas companies, with high head concentration, but the entire market is showing a differentiation. There are differentiated development opportunities in the small and medium-sized capacity storage market. Currently, suppliers are mainly Taiwanese and mainland manufacturers. With the continuous increase in domestic demand, mainland enterprises are expected to usher in good development opportunities.
accounts receivable rose, and cash flow net outflow 427.72%
Figure: 2022 Dongxin Co., Ltd. semi-annual report
Inventory in the first half of this year is mainly composed of raw materials, entrusted processing materials, inventory goods , etc. The book value of in inventory of Dongxin Co., Ltd. was 502 million yuan, a year-on-year increase of 45%. The balance of inventories of for was 56.7473 million yuan.
Faced with the situation where future revenue may expand, Dongxin Co., Ltd. actively prepares stocks is a wise choice, which can alleviate the negative impact of future rising raw material prices to a certain extent.
From another perspective, inventory backlog is not good news. If Dongxin Co., Ltd.'s technological progress leads to the inability to meet production demand, it will cause inventory depreciation losses, which will adversely affect the company's operating performance.
memory chip products are general products. Affected by factors such as macroeconomic cycle , downstream terminal demand, and main supplier production capacity, prices fluctuate periodically. If Dongxin Co., Ltd.'s customer demand and market competition pattern change in the future, the price continues to decline, or Dongxin Co., Ltd. fails to effectively broaden sales channels, causing inventory products to be unsalable, which may lead to longer inventory age and lower the net realization value of and , and the company will face the risk of inventory depreciation.
In the first half of this year, the book value of accounts receivable of Dongxin Co., Ltd. was 310 million yuan, accounting for 43.44% of the current operating income, accounting for a large proportion. If Dongxin Co., Ltd. cannot effectively control the accounts receivable in the future and cannot recover accounts receivable in a timely manner, there may be a large balance of accounts receivable or bad debts, which will increase the company's financial pressure and have a significant adverse impact on the company's future performance.
Based on the steadily rising inventory amount and accounts receivable, Dongxin Co., Ltd. paid a certain capacity deposit to the wafer foundry to ensure the wafer factory's production capacity. Dongxin Co., Ltd.'s cash flow net outflow year-on-year was 427.72%. The company's "ammunition" is insufficient for increasing R&D investment.
19nm flash memory completed the first round of slitting
and learned Huawei's business strategy of focusing on R&D investment. In the first half of this year, R&D expense investment reached 55 million yuan, a year-on-year increase of 76.44%.The proportion of total R&D investment in operating income reached 7.72%, an increase of 0.86 percentage points year-on-year. The research and development progress of Dongxin Co., Ltd. is stable in many projects: the 19nm flash memory product has completed the first round of wafer dies and is currently in the process of product debugging. Both NAND Flash and NOR Flash automotive specification products are under the verification process of the AEC-Q100 and everything is going well so far.
Figure: 2022 Dongxin Co., Ltd. Semi-annual report
This year, Dongxin Co., Ltd. applied for 41 patents (including 41 invention patents); obtained integrated circuit layout design rights 12; obtained 1 registered trademark. Dongxin Co., Ltd. holds 75 valid patents at home and abroad (including original acquisition and acquisition), 13 software copyrights, 60 integrated circuit layout design rights, and 10 registered trademarks.
Dongxin Co., Ltd. has applied for 128 domestic and foreign patents (all invention patents), and has obtained a total of 69 patent authorizations (all invention patents). The patents involve the core design links of memory chips such as NAND, NOR, and DRAM. Dongxin Co., Ltd.'s technical strength is constantly improving. Dongxin Co., Ltd. has already had strong technical and R&D advantages in the field of small and medium capacity storage.
memory chip is a long-term track. Dongxin Co., Ltd.'s downstream application demand is strong, and the domestic semiconductor industry's prosperity continues to improve; the company continues to improve its product categories and its business prospects are promising. And hugging Huawei's "big tree" is also a performance guarantee.
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