Tongfu Microelectronics (002156): 3Q Performance Exceeds Expectation of Domestic Alternatives and AMD Continues to Drive Growth and Maintain Outperform Industry

Tongfu Microelectronics (002156): 3Q Performance Exceeds Expectation of Domestic Alternatives and AMD Continues to Drive Growth and Maintain 天津夜网 Outperform Industry
The 3Q19 results exceeded our expectations. Tongfu Microelectronics announced the 3Q19 results: the company achieved operating income of 24 in 3Q19.7 ppm, an annual increase of 23%, exceeding the rate of increase 2Q to 18.1ppts; net profit attributable to mothers 5,031 million, although showing a 16% time interval, but only 2Q19 reduced by 2,045 million US dollars to turn losses, placed in the middle of the progressive forecast of 38,885-5,976,000 yuan, the net income of revenue exceeded usIt is expected that it will be mainly affected by the acceleration of domestic substitution in the packaging and testing industry and the steady order of AMD. Development Trends Domestic demand for substitution has driven the company’s performance to rebound rapidly.Under the consolidated statement caliber, the company’s 3Q19 revenue increased by 28% month-on-month, and gross profit margin increased by 3.8ppts, about 2Q continues to improve.Under the caliber of the parent company, in the third quarter of 19th, Tongfu Microelectronics’ parent company realized operating income.50,000 yuan (vs. Revenue for the second quarter of 19 8.50,000 yuan), net profit 46.97 million yuan (vs. 186 million in 2Q19), the operating situation has changed significantly.As the customers of the Chongchuan plant are mainly domestic chip design manufacturers, we believe that the company’s good performance in 3Q comes from strong domestic substitution demand, and this structural change promotes sustainability and drives the company’s performance growth. The order situation of AMD is still solid, and the demand of Sutong / Hefei plants is slightly weak.According to our industry chain research, the current order of AMD 7nm products in the two factories of Thomson Suzhou and Penang is in good condition. The 7nm server CPU and 7nm GPU are gradually increasing. We expect that from 4Q on, the wealth of AMD’s AMD related products will continue to increase month-on-month.We believe that under the single quarter consolidated statement of the third quarter, the net profit of the external operating entities of the parent company is relatively low because Nantong Tongfu and Hefei Tongfu are affected by the following factors, insufficient capacity utilization and continuous consumption: 1) MediaTekThe downstream demand of such overseas customers is still in the period of conversion of old and new kinetic energy; 2) Some products of the Hefei plant are still in the introduction stage, and the volume of income is rarely difficult to cover fixed costs. The volume of 7nm products will continue to be good for the company’s performance. We raise our 2019/2020 revenue forecast by 7% / 2% to 84.9 ppm / 106.3 trillion, raised 2019/2020 net profit forecast by 45% / 2% to 1,200 million / 3.400000000.The company’s current consensus corresponds to 20202.0 times PBR, considering that the industry is gradually coming out of the bottom, we raise the company’s estimated PBR ratio in 2020 to 2.3x, corresponding to a target price increase of 29% to 13.50 yuan (23% upside). The localization and substitution of the risk packaging and testing industry failed to meet expectations; the macro economy declined.