\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 460 Hangzhou Silan Microelectronics Co.Ltd(600460) )
China’s power IDM leader, with double upgrading of product structure and capacity Hangzhou Silan Microelectronics Co.Ltd(600460) is one of the earliest IDM manufacturers in China. From China’s first 5 / 6-inch line, 8-inch line to 12 inch characteristic process line, the company has always maintained the industry leadership and formed a vertical integration mode from epitaxy, chip design and manufacturing to packaging, including compound semiconductor. In the past five years, the company has grown rapidly, and the compound growth rate of revenue from 2018 to 2020 reached 18.94%; According to the company’s performance forecast, it is estimated that the net profit attributable to the parent company in 2021 will be RMB 1.518-1.531 billion, with a year-on-year increase of 2145% – 2165%, deducting non net profit of RMB 912926 million, turning losses year-on-year and making substantial profits.
The demand for automobile and industry continues to increase, and the domestic substitution of power devices is accelerating. With the deepening of electrification, the global power semiconductor market will reach 34.25 billion US dollars in 2025, including industrial IGBTs of 3.1 billion US dollars and vehicle IGBTs of 5.5 billion US dollars; The global power IC market will exceed US $25 billion in 2026. In addition, in 2022, the demand for IPM modules in China’s home appliance market will exceed 326 million, while the localization rate is less than 15%. At present, there is still a shortage of medium and high-end power devices. Infineon issued a price increase letter on February 14 and increased 50% investment to 2.4 billion euros for 22-year production expansion. It is expected that the capacity shortage will continue during the year. As the sales of overseas new energy vehicles increased, which occupied the limited capacity of large overseas manufacturers, the supply gap of power devices in China further widened. In this context, IDM manufacturers with independent and controllable production capacity and rapid product iteration have become the preferred alternative.
The company’s product structure is rich, and multi-path opens up growth space. At present, the company’s products include discrete power devices (52%), integrated circuits (34%) and LED (9%). In 2020, the global market share of MOSFET of the company reached 2.2%, ranking 10th; The market share of IGBT discrete devices reached 2.6%, ranking 10th; IPM city accounts for 1.6%, ranking 10th; Power management chips have ranked among the top ten in China. In the first half of 2021, the revenue of IGBT exceeded 190 million yuan, and IGBT modules have been loaded in batches; IPM’s revenue was 410 million yuan, a year-on-year increase of more than 150%; MEMS sensor revenue of 140 million yuan, an increase of more than 290%. The rich product line brings the company multiple growth curves and enhances the company’s ability to resist the cyclical fluctuations of a single category.
The release of the company’s production capacity coincides with the gradual embodiment of profitability. At present, the company’s production capacity is gradually released and focuses on medium and high-end products such as IGBT, which coincides with the insufficient supply of large overseas factories, and the company will take the lead in benefiting. In the future, the company’s 8-inch production capacity will increase from 65000 pieces / month to 70 Faw Jiefang Group Co.Ltd(000800) 00 pieces / month; 12 inches will increase from 40000 pieces to 60000 pieces / month, and the 890 million MEMS sensor project is progressing steadily. In addition, the 8-inch line turned from loss to profit in the third quarter of 21, the newly opened 12 inch line has a small proportion of equity, and the ramp up of production capacity has a small drag on the performance, and the profitability of the company will be gradually improved.
Profit forecast and Valuation: considering the double upgrading of the company’s production capacity and products, it is estimated that the revenue in 21-23 years will be RMB 7.262/10.15/12.663 billion and the net profit attributable to the parent company will be RMB 1.521/15.73/2.062 billion. With reference to the industry average PE valuation level of the company’s three main businesses in 2022, the corresponding target price will be RMB 71.03-78.31, and the buy rating will be given for the first time.
Risk tip: the ramp up of production capacity is less than expected, and the demand of downstream market is less than expected.
