Jcet Group Co.Ltd(600584) (600584)
Core view
China is a leader in the field of sealing and testing, with broad customer coverage. Jcet Group Co.Ltd(600584) was founded in 1972. It was listed on the Shanghai Stock Exchange in 2003 and established Changdian advanced in the same year. In 2015, it acquired Singapore Xingke Jinpeng, the world’s fourth largest packaging and testing manufacturer. In 2016, Changdian’s new plant in Korea was put into operation. Endogenous growth + epitaxial M & A made the company one of the largest packaging and testing enterprises in China and the first echelon of OSAT in the world. 85% of the world’s top 20 semiconductor manufacturers are corporate customers, In 2020, the company’s overseas revenue accounted for more than 70%. Introduce large industrial fund + Semiconductor Manufacturing International Corporation(688981) into equity to consolidate the company’s strategic position in the semiconductor industry chain.
The advanced packaging space continues to open, and the company’s layout is leading. Applications such as 5g, Internet of things, automotive electronics and high-performance computing continue to require the improvement of chip technology, and also continue to promote higher-end packaging technology. According to yole’s data, the scale of advanced packaging market will be USD 30 billion in 2020, USD 47.5 billion in 2026 and CAGR of 6 years will be 8%. The company’s advanced packaging layout is leading, and its coverage is not inferior to the global leader. It has advanced packaging platforms and processes such as FC, WLP, fanout, bumping, sip, TSV and pop. The number of sealing and testing patents registered in the United States ranks first in the global industry, and the overall sealing and testing capacity ranks first in the global OSAT. At the same time, the company has obvious advantages in the field of communication RF and high-order sip, and is expected to continue to deepen cooperation with key customers and expand its share. The company is also actively deploying automotive, HPC, aiot and other related applications, which is expected to start rapidly.
The rise of China’s IC design and manufacturing industry has driven the demand for local packaging and testing supporting facilities. China is the largest consumer market for integrated circuits, and downstream demand promotes the rise of China’s IC design and manufacturing industry. Since 2016, the number of Chinese chip design companies has increased significantly, from 736 in 2015 to 2218 in 2020, with a CAGR of 25%. Meanwhile, manufacturing sector is booming and China’s wafer fabrication capacity is expanding continuously. According to ICInsight data, the capacity of Chinese mainland wafer fabs in 2018 will be 2 million 430 thousand units per month, and the capacity will reach 4 million 100 thousand pieces per month by 2022. The rise of China’s IC design and manufacturing industry will continue to drive the local packaging and testing supporting demand. The company’s scale and technical layout are significantly ahead of China, which is almost equal to the sum of the 2nd to 8th manufacturers in China. At the same time, the technology R & D is comprehensive, benefiting from the cooperation with key customers and the company’s high-intensity R & D investment, which is expected to maintain a leading position.
Financial forecast and investment suggestions
We predict that the company’s net assets per share from 2021 to 2023 will be 11.91 yuan, 13.37 yuan and 15.13 yuan respectively. We select Chinese packaging and testing manufacturers Tongfu Microelectronics Co.Ltd(002156) , Tianshui Huatian Technology Co.Ltd(002185) , Wuxi Taiji Industry Limited Corporation(600667) , China Wafer Level Csp Co.Ltd(603005) and chip testing manufacturers Guangdong Leadyo Ic Testing Co.Ltd(688135) as comparable companies. Due to the characteristics of heavy assets in the industry, we select Pb valuation. According to the average Pb valuation of comparable companies in 21 years, we give a target price of 46.58 yuan and a buy rating for the first time.
Risk statement
The prosperity of sealing and testing is lower than expected; The production expansion progress is less than expected; 5g technology popularization is not as expected; Intensified market competition;
