Kunshan Kinglai Hygienic Materials Co.Ltd(300260) (300260)
Well known supplier of high clean application materials and layout of the whole industrial chain of food packaging materials
The company’s products are mainly used in food and beverage, biomedicine, vacuum and electronic semiconductors and other fields requiring process pollution control. In 2018, the company acquired 100% equity of Shandong Bihai, thus realizing industry integration from key components to integrated equipment. Shandong Bihai can provide liquid food enterprises with integrated services including pre-treatment equipment, filling equipment, rear packaging equipment, construction and installation and sterile packaging materials. In the first three quarters of 2021, the company achieved a revenue of RMB 1.478 billion, a year-on-year increase of 50.83%, and a net profit of RMB 121 million, a year-on-year increase of 92.6%. By the end of June 2021, the company’s food revenue was 474 million yuan, a year-on-year increase of 65.5%; Pharmaceutical revenue was 228 million yuan, a year-on-year increase of 40.7%; The revenue of electronic cleaning was 195 million yuan, a year-on-year increase of 23.0%.
The expansion of wafer factories is good for semiconductor equipment manufacturers, driving the demand for expansion of high clean application materials
The core shortage has been serious since 2020q4, and it is expected to be alleviated in 2022. In response to the capacity gap, wafer manufacturers have expanded their production. According to the collected data, it is estimated that the investment scale of China’s wafer factory expansion in 2021 will be 113.016 billion yuan, which can provide a capacity of 910000-92000 pieces / month. Semiconductor equipment is the largest investment item of the wafer manufacturing plant, accounting for about 75-80% of the total investment. It is expected that with the construction of the capacity expansion project of the wafer factory, it will bring a large demand for semiconductor equipment. With the advancement of advanced processes, the increase of etching / deposition channels and the large use of highly toxic gases, the link of high clean materials will usher in rapid development. The requirements for cleaner production specifications in semiconductor wafer manufacturing are further improved, and the continuous upsurge of semiconductor equipment industry will drive the expansion of demand for high-purity materials.
The company’s high clean application materials are mainly sold in parts and components, serving the equipment side and plant side. We estimate that the market space of semiconductor parts and components in Chinese mainland in 2022 was 57 billion 32 million yuan.
Technical barriers + customer resources to build the moat of industry status
The company’s high clean application material products have high requirements for materials and processes. These application products have obtained extensive international qualification certification in various fields and reached the advanced level at home and abroad. In addition, the company is one of the few manufacturers with complete technical system in the same industry in China, covering a series of core technologies such as development and design, precision machining, surface treatment, precision welding, clean room cleaning and packaging.
The company has rich customer resources. In the semiconductor field, the company has cooperative relations with American Yingcai and ram research, the top two semiconductor equipment manufacturers in the United States; In the pharmaceutical field, China’s top two pharmaceutical machinery enterprises Tofflon Science And Technology Group Co.Ltd(300171) and Truking Technology Limited(300358) have been in-depth cooperation with the company for nearly 20 years; In the field of food, Shandong Bihai has been recognized by many well-known customers, such as Sanyuan dairy, Wandashan Dairy, Master Kang group, Coca Cola, Nestle and so on.
Profit forecast and investment suggestions
It is estimated that the net profit attributable to the parent company from 2021 to 2023 will be 171 million yuan, 348 million yuan and 476 million yuan respectively, and yoy will be + 106.75%, + 104.12% and + 36.46% respectively. Based on the continuous expansion of semiconductor market scale and the strategic layout of the company’s industrial chain, it is estimated that the target market value in 2022 will be RMB 13.361 billion, corresponding to the target price of RMB 58.98, and will be rated as “buy” for the first time.
Risk tips: industry policy risks; Exchange rate fluctuation risk; Environmental protection and production safety risks; Market space measurement deviation risk; The company has experienced the risk of stock price change in recent half a year.
