Hangzhou Chang Chuan Technology Co.Ltd(300604) (300604)
Local semiconductor test equipment platform companies, profit inflection point has emerged
The company is a leading supplier of semiconductor testing equipment in China. Its main products are testing machines and sorting machines. The company attaches great importance to R & D investment. The R & D expense rate of q1-q3 from 2018 to 2021 exceeds 20%. Driven by continuous R & D, the products are extended to digital testing machines and probe tables. It is the most comprehensive rear test equipment enterprise with local product layout. At present, the main products have been supplied to well-known customers at home and abroad, such as Jcet Group Co.Ltd(600584) , Tianshui Huatian Technology Co.Ltd(002185) , Hangzhou Silan Microelectronics Co.Ltd(600460) , Riyue and so on, and the performance has achieved rapid growth: ① revenue side: the operating revenue CAGR is as high as 58.80% in 2012-2020 and 804 million yuan in 2020; ② Profit side: from 2016 to 2020, the net profit attributable to the parent company CAGR was 19.64%, lower than the income CAGR of the same period (59.52%), which was mainly due to the continuous investment in R & D expenses and the acquisition of STI, which affected the profit release. In 2020 and 2021q1-q3, the net profit margin of the company continued to rise, reaching 10.57% and 12.97% respectively, and the profit turning point has appeared.
Digital testing machine is the largest market segment, and the rise of SOC enterprises is expected to accelerate the localization process
Semiconductor testing equipment runs through the whole process of chip manufacturing, including testing machine, sorting machine and probe table. In 2020, the market scale of semiconductor test equipment in the global / Chinese mainland was 60.10/16.85 billion, of which the number test machine was the most widely used. The SoC test and storage testing machine accounted for 80% of the test machine. We estimate that the global / Chinese mainland digital test machine market in 2020 will be about 30.34 and 850 million US dollars, about 6-7 times as much as the analog test machine. It is the largest market segment in the semiconductor test equipment market.
Compared with semiconductor front channel equipment, the difficulty of test equipment is relatively low, and it is easier to realize domestic substitution. ① Testing machine: analog testing machine has been basically localized, SOC, storage and other digital models are still monopolized by Edwin & tereda, and localization has not been realized yet. The continuous expansion of local sealing and testing manufacturers and the rise of SoC design enterprises are conducive to the localization of digital testing machine; ② Sorter: Kexiu has become a global leader through continuous mergers and acquisitions, and the company has realized industrialization. From 2013 to 2018, the company’s share in the local market was about 10%; ③ Probe station: the market is dominated by Tokyo precision & Tokyo electronics, and large-scale domestic substitution has not been realized yet.
The analog testing machine and sorting machine continue to expand, and the digital testing machine completely opens up the growth space
Compared with Edwin & tereda, the company’s business scale is obviously small and has large growth space: ① testing machine: the technical indicators of simulation testing machine can reach the international first-line level, benefiting from the high prospect of the industry and the continuous breakthrough of customers, and has the conditions for continuous expansion; Digital testing machine is expected to achieve rapid and large-scale follow-up, and further open the growth space of the company. ② Sorter: the company is a local scarce supplier. Under the background of domestic substitution, the market share is expected to continue to increase; ③ Probe station: it has successfully developed a generation of cp1220, which is expected to take the lead in realizing industrialization breakthrough. In addition, in 2019, the company acquired Singapore SPI STI and entered the wafer testing field relying on STI’s AOI business, which is expected to become the second growth curve of the company.
Profit forecast and investment rating: we expect the operating revenue of the company from 2021 to 2023 to be RMB 1.525 billion, RMB 2.502 billion and RMB 3.445 billion respectively, and the corresponding dynamic PS of the current stock price is 22 / 13 / 10 times respectively. Considering the high growth of the semiconductor industry, as the leader of local test equipment, the company will fully benefit from the eastward shift of semiconductor production capacity & domestic substitution of equipment, cover it for the first time and give a “buy” rating.
Risk tips: intensified market competition, less than expected investment in the semiconductor industry, less than expected R & D progress, decline in gross profit margin, management risks caused by scale expansion, etc.
