Huaan Securities Co., Ltd. Huyang, Zhao Hengzhen recently conducted research on Lanqi Technology and released a research report "DDR5 penetration rate steadily increases, and net profit attributable to shareholders after deducting non-operating items hits a new high". This report gave Lanqi Technology an buy rating , with the current stock price of 48.22 yuan.
Lanqi Technology (688008)
Event
After-hours trading on October 20, the company disclosed an announcement on the expected increase in performance in the first three quarters of 2022:
① The first three quarters of 2022 achieved operating income of 2.881 billion yuan, an increase of 80.88% over the same period last year (statutory disclosure data).
② In the first three quarters of 2022, the net profit attributable to the parent company's owners was RMB 999 million, an increase of 94.94% over the same period last year (statutory disclosure data).
③ In the first three quarters of 2022, the net profit attributable to the parent company's owners was RMB 766 million after deducting non-recurring gains and losses, an increase of 112.39% over the same period last year (statutory disclosure data).
DDR5 penetration rate continues to increase, and the revenue of Jinji server platform declined month-on-month . Calculated, the company achieved significant growth in Q3 on revenue and profit ends year-on-year , of which revenue was 954 million yuan, increased by 9.9% year-on-year , down 7.1% month-on-month; net profit attributable to shareholders was 318 million yuan, up 55.12% year-on-year and down 15.2% month-on-month; net profit attributable to shareholders after deducting non-operating items was 273 million yuan, up 49.2% year-on-year, up by 24.2% month-on-month. We believe that the company's net profit attributable to shareholders after deducting non-operating items in Q3 is mainly due to the following reasons:
(1) The company's main source of profit is the interconnect chip product line. The interconnect chip product lines 22Q1-Q3 achieved operating income of RMB 575, RMB 661, and RMB 716 million, respectively, with continued growth month-on-month. Intel Next Generation CPU release delay has limited impact on the company's DDR5 memory interface chip penetration rate, and DDR5 products are actively stocked. AMDGenoa will also launch the next generation CPU that supports DDR5 within the year. The pace of DDR5 sub-generation iteration is accelerating. The company is the first in the industry to try the production of the second sub-generation 5600RCD chip of DDR5. We still maintain the company's annual penetration rate of DDR5 at around 15%.
(2) The revenue of Jinji server platform has decreased month-on-month but is basically in line with expectations. The company's Jinji server achieved operating income of RMB 325, RMB 365, and RMB 238 million respectively in 22Q1-Q3, and its month-on-month revenue declined due to global server demand. We believe that the market has sufficient expectations for the decline in server demand. Lin Hongming, chairman of Xinhua, confirmed for the first time in August that Q3's performance will stop the single-quarter revenue hit a new high, and it is estimated that it will decline within 19.2% month-on-month; the actual situation in Q3 is only 8% month-on-month, so the market does not need to be overly pessimistic.
(3) The company's 22-22 Q1-Q3 share payment expenses were 30 million, 36 million and 45 million, respectively, and the expense ratio decreased year-on-year.
New Product Outlook
Company continues to increase R&D investment and broaden its product line. Following the outstanding performance of the Jinji server platform, the company has CKD, PCIeRetimer, MCRRCD/DB, MXC, AI and other chips under development. Among them: the company has completed the design of the first generation of DDR5 CKD chip engineering samples, and has taken the lead in the industry to launch the first generation of DDR5 clock driver (CKD or DDR5CK01) engineering samples, and has been sent to mainstream memory manufacturers in the industry. This product will be used for the memory of the new generation of desktops and laptops.
Investment advice
We expect the company's net profit attributable to shareholders from 2022 to 2024 to be 1.395 billion yuan, 2.034 billion yuan, corresponding to 's price-to-earnings ratio is 41, 28, and 22 times, and maintains the "buy" rating.
risk warning
R&D progress is lower than expected, industry competition is intensifying, and disruptive technologies appear in the memory industry.
Securities Star Data Center calculates based on the research report data released in the past three years, GF Securities Geng Zheng's research team has conducted in-depth research on the stock, with the average prediction accuracy in the past three years as high as 99.98%. It predicts that the attributable net profit in 2022 will be 1.502 billion yuan, and the predicted PE based on the current price conversion is 37.74.
latest profit forecast details are as follows:
A total of 12 institutions in this stock have given ratings in the past 90 days, 11 buy ratings and 1 increase rating; the average target price of institutions in the past 90 days was 83.74. According to the financial report data in the past five years, Securities Star valuation analysis tool shows that Lanqi Technology (688008) has excellent competitive moat, good profitability, and average revenue growth. Financial health. The stock has a good company index of 4 stars, a good price index of 2 stars, and a comprehensive index of 3 stars.(Indicators are for reference only, indicator range: 0 ~ 5 stars, maximum 5 stars)
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