Market overview of last week (3 / 21-3 / 25):
Last week, the semiconductor market underperformed the main indexes. Shenwan semiconductor industry index fell 4.77%, the gem index fell 2.80%, the Shanghai Composite Index fell 1.19%, the Shenzhen composite index fell 2.08%, the small and medium-sized board index fell 2.46%, and wandequan a fell 1.41%. The semiconductor industry index underperformed the main index.
The overall performance of semiconductor segments is weak. Among the semiconductor segments, the semiconductor equipment segment fell 5.3%, the semiconductor material segment fell 2.9%, the discrete device segment fell 5.0%, the IC Design segment fell 4.2%, the semiconductor manufacturing segment fell 2.8%, and the packaging and testing segment fell 1.8%.
We are firmly optimistic about the structural market of semiconductors throughout the year. Previously, in our report “the structural market continues, and the six major segments deserve attention” on March 1, 2022, we proposed that “under the background of the continuous shortage of production capacity, we continue to be optimistic about the structural market of the whole year, and the opportunities of the six major segments deserve attention, such as automotive electronics, server chips, special ICs, materials and equipment, wafer factories and IOT chips”. At the current time, we have entered the disclosure window of the annual report, The performance of related companies exceeds expectations or brings short-term stock price response. At noon on March 21, Huahong semiconductor disclosed the announcement “proposed to issue RMB shares and list in China”. The announcement pointed out that the company’s board of directors approved the preliminary proposal of possible issuance of RMB shares and listing these RMB shares on the science and innovation board. The scale of issued shares shall not exceed 25% of the company’s share capital after issuance.
The fundamental trend of Huahong semiconductor is healthy: we have observed that since the beginning of 2021, under the high boom of the semiconductor industry in short supply, the global shortage and price rise has enabled A-share semiconductor to optimize the product / customer structure, expand profits, accelerate domestic substitution, and the fundamentals have continued to improve. Asset light IC design companies have shown strong performance flexibility in the price rise market, while the wafer OEM sector is regarded as the “buyer” of the equipment and materials sector, which is less concerned by funds in this round of business cycle. We believe that the upward trend of the current position cycle has been transmitted to the wafer foundry sector, and the price increase and production expansion is expected to bring the fundamentals to continue to rise in the next two quarters. In the long run, the mainland wafer foundry has entered the period of strategic production expansion, and its growth is expected to exceed expectations.
The valuation of Huahong semiconductor is lower than the industry average: as of the closing of March 25, the company’s Hong Kong stock price corresponds to 2.0xpb. In the global wafer foundry industry, Semiconductor Manufacturing International Corporation(688981) H shares are 1.0xpb, China Resources Microelectronics Limited(688396) 4.6xpb, TSMC is 7.2xpb, Lianhua electronics is 2.4xpb, world advanced is 5.7xpb, grofangde is 5.0xpb, tal semiconductor is 3.3xpb, and the industry average is 3.7xpb. Huahong semiconductor is lower than the industry average.
Opportunities related to the semiconductor industry chain are also worth paying attention to: referring to the Semiconductor Manufacturing International Corporation(688981) listing, which has led to the increase in the valuation of Semiconductor Manufacturing International Corporation(688981) industry chain companies, we judge that Huahong’s listing and financing will speed up the progress of equipment and material procurement. The demand for production expansion and the trend of price rise verify the prosperity of the wafer foundry industry. After capacity expansion, it will further promote the localization process of downstream design companies. Listed companies in relevant industrial chains deserve attention.
It is recommended to pay attention to:
1) semiconductor design: Design of the semiconductor: design: 1) design of the semiconductor design: design: designfor the design of the semiconductor: Macmic Science & Technology Co.Ltd(688711) / Shanghai Bright Power Semiconductor Co.Ltd(688368) / sound and photoelectric Department / Unigroup Guoxin Microelectronics Co.Ltd(002049) / Shanghai Fudan
\u3000\u30002） IDM: Hangzhou Silan Microelectronics Co.Ltd(600460) Zhuzhou Crrc Times Electric Co.Ltd(688187) Wingtech Technology Co.Ltd(600745) China Resources Microelectronics Limited(688396) Sanan Optoelectronics Co.Ltd(600703) ；
3) wafer foundry: Huahong semiconductor / Semiconductor Manufacturing International Corporation(688981) ;
4) semiconductor equipment materials: Naura Technology Group Co.Ltd(002371) / Jiangsu Yoke Technology Co.Ltd(002409) / Shanghai Sinyang Semiconductor Materials Co.Ltd(300236) / Advanced Micro-Fabrication Equipment Inc.China(688012) / Wuhan Jingce Electronic Group Co.Ltd(300567) / Beijing Huafeng Test & Control Technology Co.Ltd(688200) / Hangzhou Chang Chuan Technology Co.Ltd(300604) / Grinm Advanced Materials Co.Ltd(600206) ;
Risk warning: macro uncertainty, the epidemic situation continues to deteriorate; The impact of trade war; The demand is less than expected
