Sanan Optoelectronics Co.Ltd(600703) (600703)
Event: on December 6, 2021, Sanan Optoelectronics Co.Ltd(600703) subsidiary Sanan integration released China’s first filter independent bonding chip Quad, becoming the first enterprise in China to provide a complete set of quad and duplexer products required by phasevnr architecture.
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The layout of filter components is complete and the communication customer verification is smooth. Filter element is the core component of RF front-end and benefits from 5g penetration. Its demand is accelerating expansion. Therefore, independent production of filter is the top priority of localization of RF front-end. San’an integration established an international level R & D center as early as 2017 to master the complete production capacity of filter design, process development and high-end packaging by integrating global R & D talents. At present, the company’s filter product line covers FDD / TDD mainstream frequency bands, with a frequency range of 600 to 2690mhz and a passband bandwidth range of 15 to 194mhz. At present, the company is in the stage of customer expansion. Filter saw and tc-saw products have developed 41 customers, of which 17 are the main customers of mobile phone and communication module in China. The products have been successfully introduced into the supply chain of mobile phone module industry.
Take the lead in releasing four tools and accelerate the breakthrough of high-end categories. In addition to saw / tc-saw filters, the company also actively lays out niche high-end products such as duplexers and quads. The first mass-produced small-size Band1 + band3 Quad launched by Sanan integration adopts tc-saw filter technology and self-developed bonding materials, so as to realize high isolation between band1tx and band3rx, achieve world-class low insertion loss value, and the temperature drift coefficient can reach – 20ppm / ℃ or lower. At the same time, the release of quad indicates that the company has reached the forefront of the industry in the filter field. With the new NR band duplexer products, it has become the first enterprise in China to provide a full set of quad and duplexer products required by phasevnr architecture.
Compound semiconductor business has entered the fast lane. More than filters, the company’s compound semiconductor business has also made gratifying progress in capacity expansion and new customer expansion:
1) GaAs production expansion equipment is gradually in place, with a capacity of more than 8000 pieces / month. The shipped products fully cover 2g-5g mobile phone PA, WiFi and other application fields. There are nearly 100 customers in China and have become the main supplier of China’s leading RF design company.
2) PD shipments increased steadily, with 104 mass production customers; VCSEL shipments grew rapidly, with 55 mass production customers; DFB transmitter products continued to increase in volume in the first half of this year;
3) Silicon carbide diode has 518 new customers, more than 180 shipping customers, mass production of more than 60 products, and two products have passed on-board certification and sample delivery industry benchmark customers, which is in the stage of small batch production. Silicon carbide MOSFET industrial grade products have been submitted for sample verification, and vehicle specification grade products are cooperating with a number of vehicle enterprises to do die design and testing.
4) In terms of silicon-based gallium nitride, about 60 customer engineering samples and system verification have been completed, and 24 have entered the mass production stage, with superior product performance.
Profit forecast and investment rating: with the emergence of new demand and the recovery of traditional business, the company’s performance is improving rapidly. With the expansion of production lines in Changsha and Quanzhou, the company’s compound semiconductor business has also achieved large volume. We estimate that the net profit attributable to the parent company in 21, 22 and 23 years will be RMB 2.024/31.69/4.055 billion respectively, corresponding to EPS of RMB 0.45/0.71/0.91 and PE of 73 / 47 / 36 times. We are optimistic about the company’s leading edge in compound semiconductor and miniled and maintain the “buy” rating of the company.
Risk factors: increased risk of industry volatility / less than expected technical iteration / increased risk of trade friction
