\u3000\u3 Guocheng Mining Co.Ltd(000688) 233 Thinkon Semiconductor Jinzhou Corp(688233) )
Solid technological level and build barriers with high gross profit (more than 65%)
The core of materials is always the problem of yield, stability and consistency, and semiconductor monocrystalline silicon materials are no exception Thinkon Semiconductor Jinzhou Corp(688233) with years of technology accumulation and market development, it has obvious competitive advantages in terms of yield, parameter consistency and capacity scale. The share of market segments is rising, and the gross profit margin of related businesses is maintained at more than 65% all year round, which is much higher than that of foreign competitors, reflecting a solid process foundation, The silicon material business with high gross profit not only ensures the company’s own hematopoietic capacity, but also provides cash flow support for silicon parts and silicon wafer business.
China’s wafer foundry accelerated the expansion of production, cut into the silicon electrode and ushered in a golden opportunity for development
Silicon parts are used with etching equipment, with high customization attributes. The size of parts and components of different etching machine equipment are quite different. Its industry characteristics are: difficult processing technology, high barriers, and strong customization attributes and customer certification barriers. The accelerated expansion of China’s wafer foundry has not only brought opportunities for domestic substitution to semiconductor equipment manufacturers, but also brought a golden window for the development of silicon electrode, which is the core consumable in the etching link. While China’s silicon electrode industry is expected to expand rapidly, relevant Chinese manufacturers are also expected to gain more market share, Thinkon Semiconductor Jinzhou Corp(688233) on the basis of silicon materials, Strengthen the precision grinding process and make progress in reducing the flatness and surface granularity of products. Silicon parts have also obtained batch orders from some customers. The certification progress of 12 inch customers in the future is expected to become a potential catalyst for the development of silicon electrode business.
8-inch light doped silicon wafers continue to be put into production, opening up long-term growth space
Silicon wafer is one of the medium and long-term growth directions of the company. Thinkon Semiconductor Jinzhou Corp(688233) chairman and management have mastered a number of core technologies including crystal growth including 8-inch semiconductor silicon wafer and precision machining of silicon wafer surface. Most of the technical indicators and yield have reached or basically close to the level of major manufacturers in the industry. As of the first half of 2021, the company’s “semiconductor grade 8-inch light doped low defect polishing chip” raised investment project has completed the equipment installation and commissioning with a monthly capacity of 50000 pieces. At present, it is planned to produce 8000 pieces per month to continuously optimize the process; The products have entered the customer certification process. In 2023, the raised investment project will produce 150000 pieces per month. After the customer certification evaluation is passed, the company is expected to rapidly expand its production to 150000 pieces per month, and the medium-term growth space of the company will be further opened.
Profit forecast and valuation
We believe that Thinkon Semiconductor Jinzhou Corp(688233) as the leader of semiconductor grade monocrystalline silicon materials in China, the prosperity of the industry lags behind the production progress of wafer foundry. Therefore, the business cycle is still in the early stage, and the growth of silicon material / silicon electrode business is highly uncertain. With the continuous improvement of prosperity in the future, it is possible that the performance will continue to exceed expectations. We expect that the net profit attributable to the parent company from 2021 to 2023 will be 220 / 336 / 476 million yuan, and the corresponding EPS will be 1.30/2.10/2.97 yuan respectively. Corresponding to PE from 2021 to 2023, 58.08/37.99/26.86x respectively. Overall, we give Thinkon Semiconductor Jinzhou Corp(688233) 202340xpe, corresponding to the target market value of 19.04 billion yuan, and give a “buy” rating for the first time.
Risk tips
The risk that the expansion of China’s wafer factories is less than expected, the risk that the customer certification is less than expected, the risk that the production capacity climb is less than expected, the risk of intensified competition and the rise of raw material prices.
