Kingsemi Co.Ltd(688037) (688037)
The only supplier of front gluing and developing equipment in China. The company’s main business is the lithography process, gelatinization and development equipment and single-chip wet equipment, which is based on the golden track of wafer manufacturing lithography. Since 2020, the company’s performance has ushered in explosive growth. Q1-q3 company achieved a revenue of 547 million yuan in 21 years, with a year-on-year increase of 158.20%, mainly due to the strong demand for glue coating and development rear channel equipment, the contribution of front channel equipment and the unexpected performance of single-chip wet equipment. By the end of Q3, the company’s orders on hand had reached 1.331 billion yuan, an increase of 563 million yuan over the end of the 20th year, of which the new orders signed in the previous way had a year-on-year increase of 221% and the new orders signed in the later way had a year-on-year increase of 217%. In order to cope with the growth of downstream demand, the company continued to increase production expansion, announced the fixed increase plan, and will raise no more than 1 billion yuan to expand production in Shanghai Lingang Holdings Co.Ltd(600848) and Shenyang phase II projects. The synchronous expansion on both sides of supply and demand will lay the foundation for the company’s long-term high growth.
Gluing development: the space is broad, and the domestic substitution has passed the initial stage. Gluing development is the core process of lithography. It is used in front wafer manufacturing, rear advanced packaging, led and other fields. The gluing and developing equipment market is also growing steadily. According to VLSI data, the global gluing and developing equipment market will reach US $2.3 billion in 2021. At present, the market pattern is dominated by Tokyo electronics, accounting for 91% of the global market share. Kingsemi Co.Ltd(688037) there are rich and mature product lines in the field of rear gluing and development. The products are widely used in all links of advanced packaging and are a leader in China. Since 18 years ago, the company’s front equipment has also made a smooth breakthrough. Offline equipment has passed the verification and acceptance in Shanghai Huali, and i-line, KrF and ARF equipment have also received orders in mainstream wafer factories such as Changjiang storage, SMIC Shaoxing and Qingdao Xinen.
Wet process equipment: the product line is rolled out and the second growth curve is ready. Based on the technical accumulation of gluing development, the company expands the business of single-chip wet equipment, extends horizontally and opens up the growth space. According to the data of Taiwan Institute of technology, in 2020, the global wet equipment market scale was US $4.9 billion, accounting for nearly 10% of the semiconductor equipment market scale, and continued to grow with the increase of cleaning steps brought by advanced processes. Kingsemi Co.Ltd(688037) has a wide coverage of single-chip wet equipment, and has a layout of cleaning, degumming and etching. It is a leader in China in the field of physical brush cleaning. It has passed the verification at Semiconductor Manufacturing International Corporation(688981) , Shanghai Huali and other customers, and has received batch repeated orders from many Fab manufacturers in China.
Profit forecast and investment rating: we expect that the company’s revenue in 2021, 22 and 23 will be RMB 762, 12.51 and 1.760 billion respectively, corresponding to 23 / 14 / 10 times of the current stock price PS respectively. Compared with comparable companies in the same industry, Kingsemi Co.Ltd(688037) current valuation is still in a reasonable range. As the leader of gluing and developing equipment, the company has made a smooth breakthrough in front equipment, and the market share is expected to continue to increase. For the first time, give a “buy” rating.
Risk factors: industry cyclical fluctuation risk; Lower than expected risk of downstream customer expansion; International trade friction risk.
