Zhaoyi Innovation (603986): Interim report surpasses expectations and fundamentals improve strongly

This report reads: The interim report exceeded expectations, the prosperity of the NOR industry stabilized and rebounded, and emerging application markets such as TWS will be strongly driven in the next few years, maintaining the “overweight” rating.

Investment Highlights: Maintain “Overweight” rating and raise TP to 201.

04 yuan.

Taking into account that the company’s interim report exceeded expectations, the industry’s prosperity continued to pick up and raised its EPS for 2019-2021.

74, 2.

96, 4.

01 yuan (originally 1.

65, 2.

82, 3.

56 yuan), giving the company 68 times PE in 2020, raising the target price to 201.

04 yuan.

The company’s interim report exceeded market expectations.

1H19 income 12.

2.0 billion, a year-on-year increase of 8.

63%; net profit attributable to mother 1.

8.7 billion, 20 years ago.

24%; gross profit margin 37.

85% zero for one year.

02 averages, exceeding budget market expectations.

Benefiting from the completion of destocking in the industry and the introduction of major customers, the company’s second-quarter performance far exceeded market expectations.

The company’s single-quarter revenue was a record high, with gross profit hitting record highs of 7 respectively.

4.6 billion and 2.

8 billion, 32% and 32% year-on-year.

08%, net profit attributable to mothers in the second quarter1.

48 billion yuan, a year-on-year increase.


The weaker profit growth rate than the income growth rate was mainly caused by the company’s R & D expenses and non-recurring asset impairment losses, which are expected to decrease significantly in Q3.

Especially with the rapid growth of the company’s revenue, the company’s inventory turnover days reached 142 days, a continuous decline of 31 days, and a decrease of 43 days from the first quarter, indicating the end of the destocking cycle and large and tight inventory.

The prosperity of the NOR industry has stabilized and rebounded, and emerging application markets such as TWS will be strongly driven in the next few years.

Under the one-and-a-half-year destocking cycle ahead of time, the delivery cycle of large factories has been extended from 4 weeks to 6 weeks, so 4Q19 has a growing expected price.

At the same time, new applications at the industry level are booming. In addition to the unexpected market changes such as TWS, AMOLED and IOT, automotive, industrial control, wearable bracelets, game 深圳桑拿网 consoles, and substrates are the company’s main future growth points.

Risk Warning: The industry’s prosperity is below expectations.