研究报告全文：MN8Sep2023CMBInternationalGlobalMarketsEquityResearchCompanyUpdateWillsemi603501CHSequentialmargincontractionindicatesinventorydigestionsmaypersisttillFY23ETargetPriceRMB8500Willsemis1H23revenueandnetprofitwereRMB89bnandRMB153mndownPreviousTPRMB780020and93YoYrespectivelyMargincontinuedtocontractin2Q23suggestingtheCompanyismarkingeffortstodigestinventory2QNPwasUpDownside87negativeagainfailingtocontinueitsprofitabilityfrom1QThishasconfirmedCurrentPriceRMB9315ourpreviouspredictionthatinventorydigestioncontinueshowevernotnecessaryahintofmarketturnaroundlinkLookingforwardwethinkthede-ChinaTechnologystockingprocessislikelytopersisttilltheendoftheyearwhichwillcontinuetohurttheCompanysoverallmarginMaintainHOLDwithadjustedTPatRMB85LilyYANGPhDMarginerosioninadecliningmarketmobilesecurityCIS2QsGPM85239163716droppedto173from247in1Q23and333in2Q22mainlyduetolilyyangcmbicomhkweakmobileandsecuritymarketdemandandinventorydigestionMobilesecuritysensorsalesdeclined4523in2022andfurtherdeclined1425YoYin1H23InventorywasRMB98bndownby30KevinZHANGfromthepeakin3Q22HoweverMOImonthsofinventorywasstill6M85237618727Asde-stockingwillcontinueinto2H23weexpecttheoverallGPMwillkevinzhangcmbicomhkremainunderpressureOncetheinventoryisbacktonormallevel3-4MGPMcanbeexpectedtograduallyreturntoprevious30levelStockDataWearemoreconservativethantheconsensusasweexpectagradualMktCapRMBmn1097910recoveryin2024CounterpointestimatedsmartphoneshipmentwillAvg3mthstoRMBmn7469decline6to115bnin2023worstintenyearsremaincautiouson1Q2452wHighLowRMB111137170andshowelevatedriskofadelayedrecoveryintonextyearGivenTotalIssuedSharesmn11786SourceFactSetWillsemislargeinventoryandlowconsumersentimentweexpecttotalrevenuewilldecreasemodestlyby5in2023RecoverymaycomeinShareholdingStructure2024whentheCompanyssalesresumedouble-digitgrowth202425EYuRenrong303revenueisestimatedtoreachRMB229bnRMB264bnwhichis1114SourceBloomberglowerthanconsensusSharePerformanceMaintainHOLDwithTPadjustedtoRMB85basedonrollover293xAbsoluteRelativeunchangedFY25EPECurrentpriceistradingat55x24EPEand32x1-mth-108-6725EPEwhichisfairvaluedWethinkinvestorsshouldwatchWillsemis3-mth-2300GPMtrendandinventorylevelsinthefollowingquartersPotentialupside6-mth116174includesearlier-than-expectedconsumerdemandrecoverybettersalesofSourceFactSetnewproducts12-mthPricePerformanceEarningsSummaryYE31DecFY21AFY22AFY23EFY24EFY25ERevenueRMBmn2410420078191842294426423YoYgrowth21616745196152Grossmargin345308228268307SourceFactSetOperatingprofitRMBmn50222456139226584204YoYgrowth639511433909582RelatedReports11612023Willsemi603501CHNetprofitRMBmn447621448535792034434673Preliminary2022resultscameinYoYgrowth6546767534684704belowestimateMaintainHOLDEPSReportedRMB383084069171291link231102022Willsemi603501CHYoYgrowth6118212241034704Sluggish3Q22performancePEx24311091357545320DowngradetoHOLDasnear-termpressuresmaylastlongerlinkROE275554294139312102022ChinaCISSectorSourceCompanydataBloombergCMBIGMestimatesMaintainlong-termpositiveoutlooknear-termchallengespersistlink41682022Willsemi603501CH2QresultsreviewRecoverysloweddownbyweakmobileCISlink5142022ChinaCISSectorCannon-mobileCISstrengthoffsethandsetweaknessWeremaincautiouslyoptimisticlinkPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE1MOREREPORTSFROMBLOOMBERGRESPCMBRGOORhttpwwwcmbicomhk8Sep2023Figure1CMBIGMestimatesvsconsensusCMBIestimatesConsensusDiffRMBmnFY23EFY24EFY25EFY23EFY24EFY25EFY23EFY24EFY25ERevenue191842294426423207542591130875-8-11-14GrossProfit438161418109490276439619-11-20-16OperatingProfit88222003770161637795385-45-42-30Netprofit81620343467129732444614-37-37-25EPSRMB068617082911116328463909-41-40-26GrossMargin228268307236295312-08ppt-27ppt-05pptOperatingMargin469614378146174-32ppt-5ppt-32pptNetMargin438913163125149-2ppt-37ppt-18pptSourceCompanydataCMBIGMestimatesFigure2EarningsrevisionNewOldDiffRMBmnFY23EFY24EFY23EFY24EFY23EFY24ERevenue19184229442166124178-11-5GrossProfit4381614164777481-32-18OperatingProfit882220032713694-73-40Netprofit816203429343313-72-39EPSRMB0686170824552769-72-38GrossMargin228268299309-71ppt-42pptOperatingMargin4696151153-105ppt-57pptNetMargin4389135137-93ppt-48pptSourceCompanydataCMBIGMestimatesPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE28Sep2023FinancialSummaryINCOMESTATEMENT2020A2021A2022A2023E2024E2025EYE31DecRMBmnRevenue198242410420078191842294426423Costofgoodssold138941579013903148031680318314Grossprofit593083146175438161418109Operatingexpenses286532923719298934833905Sellingexpense371515516439502551SGAexpense795709789657762852RDexpense172721102496195722942589Others274282637687Operatingprofit306450222456139226584204Otherincome4455355Otherexpense932122GainlossonfinancialassetsatFVTPL2851781425289214208Investmentgainloss216141047283132Othergainslosses431103186130143161EBIT326753581895126326214193Interestincome25258327128173Interestexpense297410559494546593NetInterestincomeexpense272385475467418420Otherincomeexpense4299612700Pre-taxprofit29915002151666922033772Incometax30845680343198340Aftertaxprofit26834546143632620043433Minorityinterest237012323034Netprofit27064476144835820343467Netdividends27445582100205349BALANCESHEET2020A2021A2022A2023E2024E2025EYE31DecRMBmnCurrentassets139132029619526178711989122599Cashequivalents5423763039957112994713134Restrictedcash334131202020Accountreceivables258330292613342232083006Inventories5274878112356669760245800Prepayment151220236218261300FinancialassetsatFVTPL131514343434Othercurrentassets436579280367397306Non-currentassets87351178415577177441909020331PPE199520452540297734053823Right-of-useassets02362091519640Deferredincometax278270335277337353InvestmentinJVsassos18510152499293229642987Intangibles150916042018213322562349Goodwill280029983169387038703870FinancialassetsatFVTPL117825762964325836053988Othernon-currentassets79110411842214425582922Totalassets226483208035103356153898142931Currentliabilities6845870010373870390848916Short-termborrowings251123873632157320022117Accountpayables254439562281299128092509Taxpayable705589145107139141Othercurrentliabilities75313643926374237443744Contractliabilities110149125131157181Accruedexpenses221255263158233224Non-currentliabilities427870766717734982529121Long-termborrowings318234482750324540444687Bondpayables022502347234723472347Obligationsunderfinanceleases0179145133153165Deferredincome279304423487501570Othernon-currentliabilities8178951052113812071352Totalliabilities111231577617090160521733618037Sharecapital8688761185118911911191Capitalsurplus255742769769769769PLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE38Sep2023Retainedearnings38958049857292881124114503Otherreserves673180159030969799439964Totalshareholdersequity112391619818018194062160524889Minorityinterest2861068270405Totalequityandliabilities226483208035190355283898142931PLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE48Sep2023CASHFLOW2020A2021A2022A2023E2024E2025EYE31DecRMBmnOperatingProfitbeforetaxation2683454695880420043433Depreciationamortization7659271045120413861655Taxpaid1594511224653Changeinworkingcapital691356953525499462112Others4292841303492558750Netcashfromoperations334521921993812143645779InvestingCapitalexpenditure113311222259174319322130Acquisitionofsubsidiariesinvestments1504178017621332209225Netproceedsfromdisposalofshort-term637404654investmentsOthers002143223Netcashfrominvesting263128994017302121262324FinancingDividendpaid413569822658628798Netborrowings15673066324217461228759Proceedsfromshareissues68312032736832170Others3767438262220229Netcashfromfinancing1835293222551983597268NetchangeincashCashatthebeginningoftheyear311654237630399571129947Exchangedifference24118120000Others254822263755311728353187Cashattheendoftheyear5423763039957112994713134GROWTH2020A2021A2022A2023E2024E2025EYE31DecRevenue45421616745196152Grossprofit588402257291402321Operatingprofit1334639511433909582EBIT20856406463341075600Netprofit48126546767534684704PROFITABILITY2020A2021A2022A2023E2024E2025EYE31DecGrossprofitmargin299345308228268307Operatingmargin15520812273116159ReturnonequityROE282326851999149GEARINGLIQUIDITYACTIVITIES2020A2021A2022A2023E2024E2025EYE31DecNetdebttoequityx050507050302Currentratiox202319212225VALUATION2020A2021A2022A2023E2024E2025EYE31DecPE59354417441109545320PEdiluted59354417441109545320SourceCompanydataCMBIGMestimatesNoteThecalculationofnetcashincludesfinancialassetsPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE58Sep2023DisclosuresDisclaimersAnalystCertificationTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportinwholeorinpartcertifiesthatwithrespecttothesecuritiesorissuerthattheanalystcoveredinthisreport1alloftheviewsexpressedaccuratelyreflecthisorherpersonalviewsaboutthesubjectsecuritiesorissuerand2nopartofhisorhercompensationwasisorwillbedirectlyorindirectlyrelatedtothespecificviewsexpressedbythatanalystinthisreportBesidestheanalystconfirmsthatneithertheanalystnorhisherassociatesasdefinedinthecodeofconductissuedbyTheHongKongSecuritiesandFuturesCommission1havedealtinortradedinthestockscoveredinthisresearchreportwithin30calendardayspriortothedateofissueofthisreport2willdealinortradeinthestockscoveredinthisresearchreport3businessdaysafterthedateofissueofthisreport3serveasanofficerofanyoftheHongKonglistedcompaniescoveredinthisreportand4haveanyfinancialinterestsintheHongKonglistedcompaniescoveredinthisreportCMBIGMRatingsBUYStockwithpotentialreturnofover15overnext12monthsHOLDStockwithpotentialreturnof15to-10overnext12monthsSELLStockwithpotentiallossofover10overnext12monthsNOTRATEDStockisnotratedbyCMBIGMOUTPERFORMIndustryexpectedtooutperformtherelevantbroadmarketbenchmarkovernext12monthsMARKET-PERFORMIndustryexpectedtoperformin-linewiththerelevantbroadmarketbenchmarkovernext12monthsUNDERPERFORMIndustryexpectedtounderperformtherelevantbroadmarketbenchmarkovernext12monthsCMBInternationalGlobalMarketsLimitedAddress45FChampionTower3GardenRoadHongKongTel85239000888Fax85239000800CMBInternationalGlobalMarketsLimitedCMBIGMisawhollyownedsubsidiaryofCMBInternationalCapitalCorporationLimitedawhollyownedsubsidiaryofChinaMerchantsBankImportantDisclosuresTherearerisksinvolvedintransactinginanysecuritiesTheinformationcontainedinthisreportmaynotbesuitableforthepurposesofallinvestorsCMBIGMdoesnotprovideindividuallytailoredinvestmentadviceThisreporthasbeenpreparedwithoutregardtotheindividualinvestmentobjectivesfinancialpositionorspecialrequirementsPastperformancehasnoindicationoffutureperformanceandactualeventsmaydiffermateriallyfromthatwhichiscontainedinthereportThevalueofandreturnsfromanyinvestmentsareuncertainandarenotguaranteedandmayfluctuateasaresultoftheirdependenceontheperformanceofunderlyingassetsorothervariablemarketfactorsCMBIGMrecommendsthatinvestorsshouldindependentlyevaluateparticularinvestmentsandstrategiesandencouragesinvestorstoconsultwithaprofessionalfinancialadvisorinordertomaketheirowninvestmentdecisionsThisreportoranyinformationcontainedhereinhavebeenpreparedbytheCMBIGMsolelyforthepurposeofsupplyinginformationtotheclientsofCMBIGMoritsaffiliatestowhomitisdistributedThisreportisnotandshouldnotbeconstruedasanofferorsolicitationtobuyorsellanysecurityoranyinterestinsecuritiesorenterintoanytransactionNeitherCMBIGMnoranyofitsaffiliatesshareholdersagentsconsultantsdirectorsofficersoremployeesshallbeliableforanylossdamageorexpensewhatsoeverwhetherdirectorconsequentialincurredinrelyingontheinformationcontainedinthisreportAnyonemakinguseoftheinformationcontainedinthisreportdoessoentirelyattheirownriskTheinformationandcontentscontainedinthisreportarebasedontheanalysesandinterpretationsofinformationbelievedtobepubliclyavailableandreliableCMBIGMhasexertedeveryeffortinitscapacitytoensurebutnottoguaranteetheiraccuracycompletenesstimelinessorcorrectnessCMBIGMprovidestheinformationadvicesandforecastsonanASISbasisTheinformationandcontentsaresubjecttochangewithoutnoticeCMBIGMmayissueotherpublicationshavinginformationandorconclusionsdifferentfromthisreportThesepublicationsreflectdifferentassumptionpoint-of-viewandanalyticalmethodswhencompilingCMBIGMmaymakeinvestmentdecisionsortakeproprietarypositionsthatareinconsistentwiththerecommendationsorviewsinthisreportCMBIGMmayhaveapositionmakemarketsoractasprincipalorengageintransactionsinsecuritiesofcompaniesreferredtointhisreportforitselfandoronbehalfofitsclientsfromtimetotimeInvestorsshouldassumethatCMBIGMdoesorseekstohaveinvestmentbankingorotherbusinessrelationshipswiththecompaniesinthisreportAsaresultrecipientsshouldbeawarethatCMBIGMmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreportandCMBIGMwillnotassumeanyresponsibilityinrespectthereofThisreportisfortheuseofintendedrecipientsonlyandthispublicationmaynotbereproducedreprintedsoldredistributedorpublishedinwholeorinpartforanypurposewithoutpriorwrittenconsentofCMBIGMAdditionalinformationonrecommendedsecuritiesisavailableuponrequestForrecipientsofthisdocumentintheUnitedKingdomThisreporthasbeenprovidedonlytopersonsIfallingwithinArticle195oftheFinancialServicesandMarketsAct2000FinancialPromotionOrder2005asamendedfromtimetotimeTheOrderorIIarepersonsfallingwithinArticle492atodHighNetWorthCompaniesUnincorporatedAssociationsetcoftheOrderandmaynotbeprovidedtoanyotherpersonwithoutthepriorwrittenconsentofCMBIGMForrecipientsofthisdocumentintheUnitedStatesCMBIGMisnotaregisteredbroker-dealerintheUnitedStatesAsaresultCMBIGMisnotsubjecttoUSrulesregardingthepreparationofresearchreportsandtheindependenceofresearchanalystsTheresearchanalystwhoisprimaryresponsibleforthecontentofthisresearchreportisnotregisteredorqualifiedasaresearchanalystwiththeFinancialIndustryRegulatoryAuthorityFINRATheanalystisnotsubjecttoapplicablerestrictionsunderFINRARulesintendedtoensurethattheanalystisnotaffectedbypotentialconflictsofinterestthatcouldbearuponthereliabilityoftheresearchreportThisreportisintendedfordistributionintheUnitedStatessolelytomajorUSinstitutionalinvestorsasdefinedinRule15a-6undertheUSSecuritiesExchangeActof1934asamendedandmaynotbefurnishedtoanyotherpersonintheUnitedStatesEachmajorUSinstitutionalinvestorthatreceivesacopyofthisreportbyitsacceptancehereofrepresentsandagreesthatitshallnotdistributeorprovidethisreporttoanyotherpersonAnyUSrecipientofthisreportwishingtoeffectanytransactiontobuyorsellsecuritiesbasedontheinformationprovidedinthisreportshoulddosoonlythroughaUS-registeredbroker-dealerForrecipientsofthisdocumentinSingaporeThisreportisdistributedinSingaporebyCMBISingaporePteLimitedCMBISGCompanyRegnNo201731928DanExemptFinancialAdviserasdefinedintheFinancialAdvisersActCap110ofSingaporeandregulatedbytheMonetaryAuthorityofSingaporeCMBISGmaydistributereportsproducedbyitsrespectiveforeignentitiesaffiliatesorotherforeignresearchhousespursuanttoanarrangementunderRegulation32CoftheFinancialAdvisersRegulationsWherethereportisdistributedinSingaporetoapersonwhoisnotanAccreditedInvestorExpertInvestororanInstitutionalInvestorasdefinedintheSecuritiesandFuturesActCap289ofSingaporeCMBISGacceptslegalresponsibilityforthecontentsofthereporttosuchpersonsonlytotheextentrequiredbylawSingaporerecipientsshouldcontactCMBISGat6563504400formattersarisingfromorinconnectionwiththereportPLEASEREADTHEANALYSTCERTIFICATIONANDIMPORTANTDISCLOSURESONLASTPAGE6