From the internal perspective of the company, analyze the deep logic. Produced by Xiaohu, it must be a fine product.
Chips are very important, and Xiaohu believes that everyone knows it well. But why are chips so important? Chip is short for integrated circuit. It is equivalent to the brain cells of various Electronic devices and undertakes the functions of calculation and storage, just like our human brain.
As a digital goods B concept stock, Espressif’s stock price has soared recently, up 77% in two months. However, just after the company’s stock price skyrocketed, the two major shareholders announced that they would reduce their holdings.
The two shareholders plan to reduce their holdings of no more than 10% of the company’s shares
Espressif Technology issued an announcement stating that the company’s shareholders Shinvest Holding Ltd and Ya Dongchen Venture Capital Co., Ltd. plan to reduce their holdings by no more than 3,204,500 shares and 4,806,800 shares respectively, with a total of no more than 8,011,300 shares. shares, i.e. not more than 10% of the company’s current total share capital.
Shinvest accounts for 5.14% of the company’s total share capital. Yadong Chen accounted for 6.11% of the company’s total share capital. In this way, the two shareholders of Espressif Technology are close to the clearance-style reduction of their holdings this time.
According to public information, Espressif Technology is an enterprise focusing on the production of WiFi chips. It was established in 2008 and landed on the Science and Technology Innovation Board in 2019. The company’s main products include Wi-Fi MCU communication chips, ESP32-S2 (equipped with a single-core 32-bit processor and integrated RISC-V coprocessor).
The core technology is high-power Wi-Fi radio frequency technology and Wi-Fi IoT heterogeneous implementation. Key Applications: Smart Home, IoT, Wearables.
The stock price has risen nearly 80% in the past two months
Before the company’s announcement on the reduction of holdings, Espressif Technology rose by more than 10% during the session. It once surged 11.3% to 185 yuan per share. In the end, the stock price fell back and closed up 6.53% to 177.08 yuan per share. , the latest total market value of 14.2 billion yuan. In the past two months, the company’s share price has soared nearly 80% from the low of 100 yuan at the end of March. The main reason is to benefit from the improvement in the prosperity of the chip sector.
In just one month, Espressif received a total of 33 research institutions, and the company responded to issues such as Wi-Fi6 related conditions, lack of cores, and product structure. Espressif Technology stated that the company’s Wi-Fi6 chip ESP32-C6 product is used for the device side in the IoT field, not for routers.
The product is currently in the sample stage and will be mass-produced this year. It is therefore expected to start contributing in 2023. Espressif also said that the price of Wi-Fi chips will be adjusted based on supply and demand.
Gross profit margin keeps falling
According to the latest financial report, Espressif Technology’s net profit attributable to its parent company was about 104 million yuan last year, a year-on-year decrease of about 34%; there is a large gap between the net profit attributable to its parent company and its parent company. From the perspective of income composition, in addition to government subsidies of about 5.62 million yuan, the main non-recurring gains and losses are about 29.86 million yuan of profits from trading financial assets.
The decline in gross profit margin is the main reason for the fluctuation of Espressif Technology’s performance. From 2017 to 2020, the company’s revenue continued to rise, but its gross profit margin continued to decline.
Many institutions are cashing out at a high level
Judging from the top ten tradable shareholders of Espressif Technology, many institutions cashed out at the highest share price of Espressif Technology. According to the data of the company’s first quarterly report last year, various funds under the Industrial and Commercial Bank of China, China Construction Bank, and Taikang Life Insurance are all new shareholders of Espressif.
Last year’s interim report showed that Taikang Life Insurance and Industrial and Commercial Bank of China’s funds have reduced their holdings. In last year’s annual report, Shinvest Holding Ltd and Wang Jingyang, the second and third tradable shareholders, reduced their holdings by 14.21% and 23.37% respectively. In the first quarter of this year, two public funds reduced their holdings of Espressif Technology.
Compared with the 2020 annual report data, SMIC’s net profit exceeds 4.3 billion yuan, and Zhuosheng Micro exceeds 1 billion yuan, which are significantly higher than Espressif Technology. Compared with the average net profit of the industry, it is about 480 million yuan, which is also higher than that of Espressif Technology.
However, many institutions expressed optimism about the company’s prospects. Applications such as smart speakers, smart lighting, and smart security are rapidly emerging. It is predicted that in 2021, the growth rate of smart lighting will exceed 90%, and the growth rate of smart home appliances will exceed 30%. Espressif’s Wi-Fi/Bluetooth MCU business will benefit from the prosperity and development of downstream applications.
Today, the market size index opened lower and moved higher. The Shanghai index rose and fell in the afternoon and closed up 0.22%. Stimulated by the news of the construction of the Ningde era, the lithium battery sector staged a daily limit, and nearly 30 stocks rose by more than 8%.
The second- and third-tier liquor and chip sectors were active throughout the day. The Shanghai local stocks, coal, non-ferrous metals, clothing and home textiles, carbon neutrality, and medical and aesthetic stocks that led the gains yesterday were adjusted. On the whole, the sector continued to rotate, and the seesaw effect was obvious.
On the disk, the concept of liquor, lithium batteries, and third-generation semiconductors were among the top gainers, while free trade ports, coal, and digital currencies were among the top losers. As of the close, the Shanghai Composite Index rose 0.22% to 3592 points; the Shenzhen Component Index rose 0.74% to 14870 points; the ChiNext Index rose 1.28% to 3242 points.
Xiaohu analyzes that the current short-term sentiment in the market is clearly ebb. Most of the high-level stocks are broken, and the superimposed index is gradually weakening. It begins to test the average support. In the future, the two city indexes may be further adjusted, focusing on last Tuesday’s Dayang median line 3542 points strength.
In terms of operation, the current index structure has entered a stage of shock adjustment. It is necessary to reduce market expectations and control positions at the same time. Focus on sectors that are stronger than the index and oversold, such as 5G, semiconductors, chips and other technology stocks.