\u3000\u3 China Vanke Co.Ltd(000002) 129 Tianjin Zhonghuan Semiconductor Co.Ltd(002129) )
Core view
Event: Tianjin Zhonghuan Semiconductor Co.Ltd(002129) released the annual performance express of 2021. During the reporting period, the company expects to achieve a total operating revenue of 41.025 billion yuan, an increase of 115.28% compared with the same period last year, a net profit of 4.02 billion yuan, an increase of 269.14% compared with the same period last year, and a net profit of 386000 yuan excluding non recurring profits and losses attributable to shareholders of listed companies, an increase of 305.10% compared with the same period last year.
Semiconductor photovoltaic business segment, G12 silicon wafer accelerated penetration. By the end of the third quarter of 2021, the market penetration of G12 silicon wafer had increased from 6% at the beginning of the year to 20%, and the total single crystal production capacity had increased to 73.5gw (of which G12 production capacity accounted for about 59%). The largest Cecep Solar Energy Co.Ltd(000591) grade monocrystalline silicon investment project in the industry – 50gw (G12) Cecep Solar Energy Co.Ltd(000591) grade monocrystalline silicon material intelligent factory (Ningxia central phase VI project) is progressing smoothly. It is expected to start production at the end of 2021 and reach full production in 2023.
In the semiconductor materials business segment, products continue to be sold in large quantities, and customer development is progressing smoothly. The production capacity of 8-12 inch polished wafer and epitaxial wafer continues to increase; Dual path development of characteristic process + advanced process, focusing on accelerating the development of advanced process products, 8-inch RTP, SOI and 12 inch IGBT, CIS, PMIC, DRAM, DDIC, 28nm logic and other new products have been submitted for sample verification, and the product dimension has been upgraded rapidly; Taking advantage of the rapid growth opportunity of the semiconductor market, based on the Chinese market, while growing together with strategic customers, it has signed long-term strategic cooperation agreements with a number of international chip manufacturers, laying a customer foundation for global business expansion.
The process technology is improved and the cost advantage is highlighted. The production efficiency of the company’s single furnace is leading in the industry, and the consumption rate of silicon per unit product has decreased significantly year-on-year. Through the improvement of thin line and flake process, the silicon wafer yield and product a rate have increased significantly, and the gross profit of unit product has been improved to a great extent. Facing the price fluctuation of polysilicon raw materials, the company has reasonably controlled the inventory through long-term good supply chain cooperation, which has better guaranteed the production and operation of the company.
Investment advice
It is estimated that the company’s revenue from 2021 to 2023 will be 41.0255497464869 billion yuan respectively, with a year-on-year increase of 115.3% / 34.0% / 18.0%, and the net profit will be 4.019/51.296454 billion yuan respectively, with a year-on-year increase of 269.1% / 27.6% / 25.8%. The current closing price corresponds to 26 times of PE in 2022. Considering the strong demand of the company’s downstream photovoltaic installation market and large growth space in the future, the “buy” rating is given for the first time.
Risk tips
Customer expansion is less than expected, and the downstream market demand is less than expected
