As a subject with the dual concepts of "special valuation" and "chip", CLP Huada Technology (00085) PE (TTM) is only 3 times, who doesn't love the price of cabbage?
Zhitong Financial APP has learned that China Power Huada Technology is a leading domestic smart card and security chip manufacturer under China Electronics, mainly selling integrated circuit products, and its performance has maintained a compound growth of medium and high double-digits in the past three years, and its market value has also increased with the growth of performance, with an increase of 169% since the beginning of 2022. Although the market value has increased significantly, the performance has been stronger, resulting in low valuations.
The company is a low-valuation of high-performance stocks, there are funds quietly laid out in the near future, the stock price has continued to rise for four consecutive weeks, and the probability is to make advance arrangements for the release of annual results, mainly for the semi-annual report profit increased by 17 times, the annual performance is expected to be more eye-catching. However, this trend-leading high-performance stock has not been amplified at present, and the turnover rate is low, so it is still not familiar and tapped by most investors.
So, let's take a look at the company, whether its cheap chips can be picked up, and whether the fundamentals can support the market capitalization to remain in the upward channel.
Excellent performance and generous dividends.
Zhitong Financial APP learned that the integrated circuit products of China Power Huada Technology are mainly used in the fields of smart cards, radio frequency identification and wireless communications, and the specific products include the second-generation resident ID card, social security card, fuel card, telecommunication card, meter card, transportation card and wireless network equipment used by Chinese citizens. The company has excellent performance, with a compound revenue growth rate of 36 from 2020 to 20229%, with a growth rate of 55 in the first half of 20239%, with a high probability of maintaining a high growth trend throughout the year.
In addition to strong growth, the company's profitability has also continued to improve, with gross margin from 3396% all the way up to 44 in the first half of 202378%, an increase of 1082 percentage points. In addition, the company adjusted the debt structure and carried out refined management, and the expense ratio decreased year by year, and the expenses (administrative, sales and financial) during the period increased from 3728% down to 1415%, a whopping 2313 percentage points.
Excluding the impact of special items (mainly affecting 2020), the company's net profit margin for the first half of 2020-2023 was .39% and 306%, of which the net profit in the first half of 2023 has exceeded that of the whole year of 2022, and the annual profit announcement has not been released, but the second half of the year is expected to be optimistic, and the growth rate and profit margin are likely to maintain the level of the first half of the year. With a significant increase in earnings, the company's ROE (annualized in 2023) is as high as 484%。
More importantly, the performance growth of CLP Huada Technology is benign, which is basically driven by business capacity and endogenous growth, rather than the path of debt expansion like most enterprises. In the first half of 2023, the company's debt-to-asset ratio was 57%, compared to 566%, basically unchanged, and its interest-bearing debt is mainly short-term bank borrowings, which will be 1298%, a decrease of 14 compared to FY202081%。
It is worth noting that CLP Huada Technology is also very generous in its dividend payout, paying dividends every year, with a stable dividend payout ratio of more than 30%, and at the current market capitalization, the dividend yield reaches 5%. Such a strong performance and generous dividend performance have been "hidden" by the market, and prescient value investors may have been lurking, waiting for the valuation to be released. The expectation of an increase in the company's valuation lies in business expectations and the potential of the industry.
or become a dark horse, the future can be expected.
According to Eurosmart statistics, global smart card shipments have stabilized at 90-10 billion in recent years, while China is one of the world's largest smart card application markets, and maintains a high single-digit growth. According to relevant research institutes**, the market size of China's smart card industry will reach 344 in 2023700 million yuan.
From the perspective of market structure, according to the data of China Business Intelligence Network, the concentration of China's smart card chip industry is relatively scattered, and China Power Huada Technology is 10The market share of 69% ranks second, second only to Ziguang Guowei. From the official website, the company provides security SE chips and security MCU chips, and the solution scenarios are mainly used in the Internet of Vehicles, Internet of Things and financial payment.
The company has a complete first-class system, which can stably provide products to meet market demand. For example, the epidemic disrupted the ** chain, resulting in a shortage of chips, and the company still maintained the growth of shipments from 2021 to 2022, and the shortage of production capacity will gradually ease in 2023. The company actively adjusted its product strategy and increased its marketing in the application of Internet of Things and intelligent connected vehicle security chips, and the shipments of eSIM chips, intelligent connected vehicle security chips and high-end SIM chips performed eye-catchingly.
In the first half of 2023, the R&D expenses were 9%, a year-on-year decrease, mainly due to the significant growth in performance driven by R&D results. During the period, the company added 18 new patents and registered 1 new software work. With the advantages of scale, product and chain, in 2023, CLP Huada Technology will achieve a double rise in volume and price. From the comparison of peers, Ziguang Guowei and CLP Huada Technology are the double leaders in the industry, but the latter has grown faster, has a higher level of profitability, and has significantly increased its market share.
In 2024, the demand of the smart card industry will be improving, and CEC Huada Technology has strong industry competitiveness in the past, and its high performance growth is sustainable. In addition, major brokerages are optimistic about the overall global semiconductor environment, among which Huatai ** research report believes that the global semiconductor market is slowly recovering, and China is expected to maintain high-intensity expansion in 2024, optimistic about the development of the industry driven by AI. As an excellent leader in the subdivided field, the company will receive the attention of large funds and institutions.
CEC Huada Technology has a very low valuation, with a PE (TTM) of 3 times, and according to the relevant trading software, the average PE value of the semiconductor sector is 163 times, the valuation can be at a premium of up to 5433%, compared with peers, taking Ziguang Guowei as an example, because it is an A-share, even if it is calculated with reference to the 50% premium of AH, the valuation of CLP Huada Technology in PE (TTM) and PB is only 20% and 45% of Ziguang Guowei respectively. Moreover, CLP Huada Technology has generous dividends, which is more attractive than its peers.
On the whole, CLP Huada Technology currently has a low trading volume, but its performance is excellent, dividends are paid every year, and its valuation is also very low.