Shengmei Shanghai (688082)
Global semiconductor cleaning equipment star, performance continues to improve rapidly
The company is the leader of local semiconductor cleaning equipment, mastering the original technologies such as saps, Tebo and Tahoe, and the technical level is advanced in the world. Its products cover three categories: semiconductor cleaning equipment, advanced packaging wet equipment and semiconductor electroplating equipment. It has successfully supplied Hynix, Huahong group, Changjiang storage, Semiconductor Manufacturing International Corporation(688981) and other well-known wafer factories at home and abroad. While the downstream customers continued to make breakthroughs, the company’s performance achieved rapid growth: ① revenue side: the revenue CAGR was 58.38% in 2017-2020, reaching RMB 1.007 billion in 2020, and the revenue scale expanded rapidly; ② Profit side: the net profit attributable to the parent company in 2017 was only 11 million yuan, reaching 197 million yuan in 2020. The CAGR in 2017-2020 was as high as 162.65%, much higher than the growth rate of the income side, and the profitability was significantly improved.
Domestic cleaning equipment has a broad alternative space, and the company’s cleaning equipment business has a large growth space
The Chinese mainland semiconductor industry has entered the golden development stage. As a link that is easier to achieve domestically, cleaning equipment will usher in a good opportunity. ① In 2020, the market scale of local cleaning equipment was USD 936 million, and the CAGR from 2016 to 2020 was as high as 30.47%, showing a rapid development momentum. In the short term, the expansion of China’s wafer fabs is not reduced. 8 of the 29 newly built 29 wafer plants in Chinese mainland Chinese mainland are strongly driving the demand for cleaning equipment. In the medium and long term, under the background of technology upgrading, the chip manufacturing process will increase & the structure will be complex, the demand and technical difficulty of semiconductor cleaning will increase significantly, and the demand for cleaning equipment is expected to increase both in quantity and price. ② The global cleaning equipment market is dominated by DNS, Tel, Lam and other overseas leaders, In 2019, the total market share of three companies was close to 90% (by sales). Sheng Mei has achieved the breakthrough of domestic substitution in Chinese mainland. The bid winning ratio (20.5%) in 2019 was second only to DNS in mainland China. The market share of semiconductor cleaning equipment is expected to be improved continuously with the double logic of market demand upgrading and domestic substitution.
Wet and dry process equipment are developed simultaneously, and the platform layout opens up the growth space of the company
Semiconductor equipment competition is suitable for breeding large global companies. Platform extension is the only way for semiconductor equipment enterprises to become bigger and stronger. The company started with cleaning equipment and has built a semiconductor equipment platform with both wet and dry process equipment. ① Under the wet process, the company has horizontally expanded advanced packaging wet & electroplating equipment: in the later advanced packaging link, the company has successfully expanded new customers such as Tongfu Microelectronics Co.Ltd(002156) , SMIC Changdian and nepes, and the products are in the mass production stage; In terms of electroplating equipment, the former copper interconnection electroplating equipment won the order of Huahong group in 2019, and 2021m10 company won the demo order of ultraecpmap copper plating equipment from a major semiconductor manufacturer in Asia. The company’s customer base is expected to make a breakthrough again. ② Based on the vertical furnace tube, the company realized the platform expansion of dry process equipment. In the early stage, it focused on LPCVD, then developed to oxidation furnace & diffusion furnace, and finally applied to ALD. In 2020, the company realized the sales of the first equipment, and further opened the growth space with the large volume of subsequent products.
Profit forecast and investment rating: we estimate that the company’s revenue from 2021 to 2023 will be RMB 1.571 billion, RMB 2.571 billion and RMB 3.736 billion respectively, and the corresponding dynamic PS of the current stock price will be 36, 22 and 15 times respectively. As the leader of local semiconductor cleaning equipment, the company has strong growth and platform extension ability. It is covered for the first time and is rated as “overweight”.
Risk tips: Technology Upgrading & new product development is not as expected, customer concentration is high, market competition intensifies, high dependence on some key parts suppliers, controlling shareholders face class action, etc.
