Wingtech Technology's single-quarter net profit exceeded 800 million, and Q3 became a turning point in performance

On October 29, Wingtech Technology released its third-quarter report, achieving operating revenue of 13.877 billion yuan in the third quarter of 2021 and net profit attributable to shareholders of the parent company of 809 million yuan, a year-on-year increase of 45.06%, far exceeding market expectations.

According to previously disclosed announcements, Wingtech Technology's net profit attributable to the parent company was 652 million yuan in the first quarter, 580 million yuan in the second quarter, and 809 million yuan in the third quarter. Due to the meager profits of Wingtech Technology's communication product integration business in the first half of the year due to the impact of the supply chain, considering that the upstream supply chain prices have not loosened significantly, the interest on convertible bonds of 8.6 billion yuan will be added in the third quarter, the continued losses of Delta Technology before the resumption of production, and the equity incentive expenses amortized quarter by quarter, GF Securities, Changjiang Securities, Founder Securities and other brokerages generally predicted that the net profit attributable to the parent company in the third quarter would be between 650 million and 700 million yuan.

Wingtech Technology pointed out in the announcement that the increase in net profit attributable to the parent company was mainly due to the fact that the semiconductor business has maintained a good development trend driven by the demand for new energy vehicles this year, and the automotive-grade products have shown good competitiveness; at the same time, in terms of product integration business, the adverse impact of the price increase of upstream device accessories has shown a trend of easing in this reporting period, sending out a strong signal of a turning point in performance.

In 2021, Wingtech Technology has been making frequent moves in business expansion and capacity expansion. On June 1, it completed the acquisition of Delta Technology and entered the optical module business. It is currently actively promoting product verification and resumption of supply to build core competitiveness in the optical track. Wingtech Technology stated that it will make full use of its management advantages, R&D advantages, scale advantages and customer resource advantages in the product integration business and semiconductor business to comprehensively promote the effective integration of optical module business and upstream and downstream of the industrial chain.

On July 23, Wingtech Technology Kunming Intelligent Manufacturing Industrial Park was officially put into production, which greatly alleviated the tight capacity of Wingtech Technology's communication business and met the growing capacity needs of global customers. In addition, Jiaxing and Wuxi factories are also expanding production. With the gradual mass production of new customers and new projects in the second half of the year, it has become a strong support for achieving a turning point in performance.

On August 12, Nexperia, a wholly-owned subsidiary of Wingtech Technology, completed the acquisition of Newport Wafer Fab, the largest wafer fab in the UK. Zhang Xuezheng, Chairman of Wingtech Technology and Chairman and CEO of Nexperia, said that the addition of Newport will effectively enhance Nexperia's IDM capabilities in automotive-grade IGBT, MOSFET, analog, and compound semiconductors such as gallium nitride and silicon carbide. There are only a handful of automotive-grade 8-inch wafer fabs in the world, and Newport is expected to introduce production capacity for Nexperia from the fourth quarter.

Recently, a piece of news from Taiwanese media has also caused a great shock in the industry. According to Taiwanese media DIGITIMES, China's leading ODM Wingtech Technology has replaced Taiwan-based manufacturers such as Quanta and Foxconn to become Apple's MacBook assembly plant. The sudden emergence of Wingtech Technology has shocked the Taiwanese industry. Taiwanese Apple supply chain industry said that Apple has a clear attitude towards suppliers to disperse production, and has also tried to introduce Chinese mainland manufacturers in Mac assembly plants. This time, Wingtech Technology was chosen, indicating that Apple's laptop assembly is no longer controlled by Taiwanese manufacturers. Wingtech Technology has already set up production lines and is currently in the initial trial production stage.

Zhang Xuezheng, Chairman of Wingtech Technology, said that Wingtech Technology's strategy is divided into three stages: In the first stage, the field of communication product integration will expand from the consumer field to the industrial, IoT, and automotive electronics fields, with more products, more customers, and greater sales, and the communication product integration business will be developed into a powerful hardware traffic platform; In the second stage, vertical integration will be accelerated, and more components will be integrated and developed in the semiconductor and component fields through mergers and acquisitions, integration, and self-development, so as to increase our own supply capacity and form a safe and controllable supply system; In the third stage, with semiconductors as the leader, we will increase investment, enhance innovation capabilities, empower component and system integration, comprehensively enhance the core competitiveness of complete products, provide customers with products that others do not have and that we have better than others, establish a company moat and promote the company's strategic transformation from a service-oriented company to a product company.