Zhaoyi Innovation (603986): TWS drives strong demand for NORFLASH, and company performance recovers

Zhaoyi Innovation (603986): TWS drives strong demand for NORFLASH, and company performance recovers

Core point of view The company’s net profit hit a record high.

The company achieved revenue of 22 in the first three quarters.

4.0 billion, a year-on-year increase of +28.

04%; net profit attributable to mother is 4.

500,000 yuan, +22.

42%, and inventory is down by 22 per year.


Q3 achieved revenue of 10 in a single quarter.

02 ppm, +62 year-on-year.

97%; net profit attributable to mother 2.

62 billion; +北京会所体验网98.

21%, net of non-attributed net profit2.

36 billion, a year-on-year increase of +92.

2%; Q3 single-quarter gross margin was 41%, a year-on-year increase of 2%.

Benefiting from the strong demand for Nor Flash, the company’s gross profit increased, its inventory declined, and its performance exceeded expectations.

Benefiting from the rapid growth of TWS, the demand for Nor Flash is strong: 2019H1 TWS headsets have achieved a total of 44.5 million units, of which Q1 and Q2 have reached 17.5 and 27 million units, respectively, an increase of 40% and 54% from the previous quarter.The highest expectation is over 1.

200 million units, an increase of 161% in ten years.

Benefiting from the strong demand of TWS, we believe that the strong demand of Nor Flash will continue until next year, and the company’s gross profit margin will also increase through the increase in transfer volume.

The new noise reduction / voice control function of TWS will help Nor to evolve to high capacity such as 256Mb.

The company also launched 256Mb and 512Mb high-capacity products accordingly.

In the medium and long term, benefiting from the volume of IOT, automotive electronics, and 5G products, demand for Nor Flash will continue to be strong. As a leading manufacturer of internal memory chips, the company will benefit deeply.

SLD NAND 38nm has begun small-scale expansion, and 24 nm process product technology has matured.

The company also launched a small-capacity eMMC solution based on self-developed NAND Flash.

With the maturity of product technology and the release of production capacity, revenue is expected to usher in rapid growth.

Changxin’s first generation of 8Gb DDR4 DRAM has been put into production, and its products have been verified by major customers at home and abroad.

Through cooperation with Changxin, the company cut into the DRAM 100 billion US dollar market, completed the full layout of storage products, and the ceiling was completely opened.

The domestic 32-bit leading MCU has a large domestic replacement space: The company is a leading domestic 32-bit MCU supplier. Its products have achieved full coverage of low, medium, and high-end, and successfully cut into automotive MCUs. The company’s MCU business revenue increased by 43 in the past three years.

2%, the growth rate is higher than the overall revenue.

MCU demand is robust, localization rate is not high, and there is huge space for replacement.

Financial Forecast and Investment Recommendations Considering that the company’s chip business has strong demand, we raised the company’s net profit attributable to mothers to 19 in 21-21.

7, 11.

2, 12.

600 million (previous forecast was 6 for 19-20).

45 and 8.

5.5 billion), based on a 63-year average estimate of comparable companies, corresponding to a target price of 219.

87 yuan, adjusted to overweight rating.

Risks suggest that the storage business is below expectations; new product development is below expectations.