China CIS Sector Summary
Core Content
The China CIS sector is analyzed with a focus on market trends, performance outlook, and investment recommendations for key players. The report outlines both short-term challenges and long-term opportunities for CIS suppliers in the mobile, auto, and security segments.
Main Points
Global CIS Market Outlook
- 2022 Sales: Global CIS sales are expected to decline by 5.1% YoY, primarily due to the mobile CIS market underperforming.
- 2022 Mobile CIS Sales: Mobile CIS sales will drop by 9.8% YoY, driven by lower smartphone shipments and BOM cost pressures.
- Auto CIS Market: The auto CIS market is expected to grow by 24% YoY in 2022, fueled by increased camera installations in vehicles and ADAS penetration.
- Security CIS Market: The security CIS market will remain weak in 2022 due to conservative spending by governments and enterprises, but long-term growth is anticipated.
Key Trends
- Market Share Consolidation: The auto CIS market is expected to consolidate further among top players like Onsemi, Willsemi, and Sony.
- Smartphone OEM Shifts: Samsung and Honor have gained market share, while Apple, Xiaomi, and Oppo have seen mixed performance.
- CIS Content in Smartphones: The average CIS content in smartphones declined from 4.1 in 2021 to 3.9 in 1H22, with a further expected drop of 4.1% YoY in 2022.
- AR/VR Opportunity: Willsemi is well-positioned in the AR/VR industry, which is expected to gain momentum in 2023/24E.
Investment Recommendations
- Willsemi (603501 CH): Maintained as a BUY with a revised target price of RMB120.
- GalaxyCore (688728 CH): Maintained as a BUY with a revised target price of RMB20.
- Market Sentiment: The depressed market sentiment and weakened consumer confidence justify the revised valuations.
Key Players and Market Share
| Company |
Market Share (2021) |
2022E Share Change |
2023E Share Change |
| Sony |
3.31% |
-0.15% |
-9.05% |
| Samsung |
1.00% |
-1.05% |
-3.00% |
| Willsemi |
5.87% |
0.34% |
0.19% |
| GalaxyCore |
0.10% |
1.93% |
0.37% |
| SmartSens |
0.87% |
0.62% |
0.87% |
| Others |
-3.16% |
-3.30% |
-1.01% |
Valuation Table
| Name |
Ticker |
Market Cap (US$ mn) |
Last Price (LC) |
TP (LC) |
P/E (FY22E) |
P/E (FY23E) |
ROE (FY22E) |
ROE (FY23E) |
| Willsemi |
603501 CH |
12,424 |
74.89 |
120.0 |
22.6 |
21.3 |
19.2 |
16.9 |
| GalaxyCore |
688728 CH |
5,342 |
15.26 |
20.0 |
37.0 |
30.8 |
11.9 |
12.5 |
| Sony |
SONY US |
82,505 |
9891.00 |
NA |
14.0 |
12.5 |
11.3 |
11.5 |
| Samsung |
005930 KS |
234,853 |
56,200.00 |
NA |
9.7 |
11.8 |
12.2 |
9.4 |
| STM |
STM FP |
29,709 |
33.62 |
NA |
8.4 |
8.7 |
33.3 |
25.2 |
| ON Semi |
ON US |
28,087 |
64.83 |
NA |
12.6 |
12.9 |
39.7 |
28.4 |
| Average |
|
|
|
|
18.2 |
16.6 |
21.3 |
17.3 |
Financial Highlights (FY22E and FY23E)
| Metric |
Willsemi |
GalaxyCore |
Sony |
ON Semi |
Avg. |
| Sales (US$mn) |
3,219.8 |
951.3 |
79,599.0 |
8,260.0 |
|
| Growth% |
-4.8% |
-3.1% |
-9.9% |
22.6% |
|
| GPM (%) |
33.8% |
31.0% |
30.0% |
49.2% |
|
| EBITDA margin (%) |
23.7% |
20.0% |
19.3% |
25.0% |
|
| NPM (%) |
18.4% |
15.1% |
7.9% |
25.0% |
|
| EPS (US$) |
0.50 |
0.06 |
4.68 |
4.62 |
|
| FCF yield |
2.2% |
-8.0% |
10.1% |
4.9% |
|
| Metric |
Willsemi |
GalaxyCore |
Sony |
ON Semi |
Avg. |
| Sales (RMBmn) |
3,704.8 |
1,048.3 |
83,383.0 |
8,449.0 |
|
| Growth% |
15.1% |
10.2% |
30.2% |
26.2% |
|
| GPM (%) |
34.5% |
31.0% |
30.2% |
25.0% |
|
| EBITDA margin (%) |
24.6% |
20.4% |
18.5% |
37.5% |
|
| NPM (%) |
17.0% |
16.4% |
7.9% |
25.0% |
|
| EPS (RMB) |
0.53 |
0.07 |
5.29 |
4.62 |
|
| FCF yield |
4.0% |
-8.0% |
8.7% |
6.0% |
|
Summary of Key Market Segments
Mobile CIS
- Market Share: 63.1% in 2021, expected to shrink to 60% in 2022.
- Challenges: Weak smartphone shipments and BOM cost pressures.
- Forecast: Mobile CIS sales are expected to decline by 9.8% YoY in 2022 and 4.1% YoY in 2023.
- Key Players: Sony, Samsung, and Willsemi dominate the market, with Sony leading in 2021.
Auto CIS
- Market Growth: Expected to grow by 24% YoY in 2022.
- Camera Increase: From ~2.7 cameras per vehicle in 2021 to 4.2 in 2025.
- Market Share: Top 3 players (Onsemi, Willsemi, Sony) account for ~62% of the market.
- Willsemi's Position: Leads in auto CIS with clients including Mercedes-Benz, BMW, Tesla, etc.
- Forecast: Auto CIS sales are expected to grow by 50% YoY in 2022.
Security CIS
- Market Share: Hikvision and Dahua combined represent 53% of the market.
- Growth Outlook: Expected to grow at a 9.0% CAGR from 2022 to 2026.
- Market Share: Willsemi leads with 22% in 2021, followed by SmartSens and GalaxyCore.
Investment Outlook
- Willsemi: Maintained as a BUY with a revised target price of RMB120, due to auto CIS growth and AR/VR opportunities.
- GalaxyCore: Maintained as a BUY with a revised target price of RMB20, due to mass production and mid-to-low-end market leadership.
Risks
- Economic Uncertainty: May lead to reduced consumer spending.
- Mobile CIS Recovery: Uncertain and may not occur in 2022.
- Inventory Destocking: May take longer than expected to normalize.
