\u3000\u3 Guocheng Mining Co.Ltd(000688) 012 Advanced Micro-Fabrication Equipment Inc.China(688012) )
Matters:
The company disclosed in the annual report of 2021 that in 2021, the company achieved revenue of 3.108 billion yuan (year-on-year + 36.72%), net profit attributable to the parent company of 1.011 billion yuan (year-on-year + 105.49%), and net profit attributable to the parent company of 324 million yuan (year-on-year + 129110%) after deduction.
Ping An View:
With high revenue growth and improved profit margin, the company’s performance in 2021 is bright. 1) Revenue side: the company’s revenue increased significantly in 2021, with a total operating revenue of 3.108 billion yuan, a year-on-year increase of 36.72%, and the number of product sales cavities increased by 43.03% year-on-year to 349 cavities. 2) Gross profit margin: in 2021, the company’s comprehensive gross profit margin was 43.36%, with a year-on-year increase of 5.69pct, mainly benefiting from the significant improvement of MOCVD equipment gross profit margin (from 18.65% to 33.77%). 3) Expense side: in 2021, the total rate of the company’s sales, management, R & D and finance expenses was 26.56%, a year-on-year decrease of 4.81 PCT, mainly due to the dilution of R & D expense rate due to the increase of income and the large increase of interest income during the year. 4) Net profit margin: in 2021, the net profit margin attributable to the parent company reached 32.54%, with a year-on-year increase of 10.89pct; The net profit margin attributable to the parent company after deducting non profits was 10.44%, an increase of 9.41pct year-on-year. 5) Orders: in 2021, the amount of new orders signed by the company reached 4.13 billion yuan (year-on-year + 90.5%), and the orders on hand were full.
Etching equipment: the market share is rising, and domestic substitution is advancing steadily. In 2021, the company’s etching equipment revenue was 2.004 billion yuan, a significant increase of 55.44% over 2020; The gross profit margin was 44.32%, basically the same as that of the previous year (44.48%). The company’s CCP and ICP etching equipment have made good progress. 1) The market share of CCP equipment continued to increase. In 2021, the company produced and shipped 298 cavities of CCP etching equipment, with a year-on-year increase of 40%. The company’s CCP equipment has been applied in batch to the integrated circuit production lines of front-line customers outside China, and continues to improve the market share. In some customers, the market share has entered the top three or even the top two. 2) The performance of ICP etching equipment broke out, and the process verification became more and more mature. In 2021, the company produced and shipped 134 cavities of ICP etcher, with a year-on-year increase of more than 230%. The company’s primo nanovar ICP etching products have verified more than 100 ICP etching processes on the production lines of more than 15 customers. The etching performance and mass production indicators of some processes have met the requirements of customers and have been put into mass production, and continue to be extended to the verification of more etching applications.
MOCVD equipment: Mini LED has become a strong driving force for growth. Large orders are in hand and the performance can be expected. Due to the downstream market and the unrecognized revenue of the newly signed Mini led MOCVD equipment orders this year, the company’s MOCVD equipment revenue was 503 million yuan in 2021, an increase of about 1.53% over 2020; The gross profit margin reached 33.77%, significantly higher than 18.65% in 2020. Benefiting from the explosion of miniled market, there is a strong demand for relevant MOCVD equipment. In June 2021, the company released the MOCVD device prismo unimaxr for mass production of high-performance Mini LEDs, and the order has exceeded 100 cavities within half a year; In March 2022, the company announced that it had obtained the purchase order of Shenzhen Mtc Co.Ltd(002429) 52 cavity prism Unimax MOCVD equipment. In addition to miniled, the company also actively layout the third generation semiconductor equipment for power device applications. Gan power device MOCVD equipment has been delivered to leading customers outside China for production verification. SiC epitaxial equipment has also started research and development, and the product line has been further enriched.
The research and development of thin film deposition equipment has made phased progress, and the design of EPI equipment has been completed. In 2021, the company’s Tungsten filled CVD equipment made phased progress. The capacity of CVD tungsten process equipment applied to metal interconnection has been able to meet the needs of process verification of customers, and the products are being verified with key customers. During the year, the company established an EPI equipment R & D team. Through basic research and adopting the technical feedback of key customers, the company has formed independent intellectual property rights and innovative design schemes of pretreatment and epitaxial reaction chamber. At present, the company’s EPI equipment has entered the stage of prototype design, manufacturing and commissioning.
Equity incentives enhance talent stickiness, and performance goals highlight development confidence. On March 10, 2022, the company announced the 2022 restricted stock incentive plan (Draft), which plans to grant 4 million restricted shares to 1104 incentive objects (accounting for 99.4% of the company’s employees). On March 29, the company granted 4 million shares to the incentive object at the price of 50 yuan / share. The performance assessment target corresponding to the 2022 incentive plan requires the company’s operating revenue to increase by 20% / 45% / 70% / 100% respectively from 2022 to 2025 compared with 2021 (RMB 3.108 billion). If the performance target of 100% ownership is reached in subsequent assessment years, the company’s revenue in 2022 / 2023 / 2024 / 2025 will not be less than RMB 37.3/45.1/52.8/6.22 billion respectively.
Investment suggestion: fine tune the company’s profit forecast. It is estimated that the net profit attributable to the parent company from 2022 to 2024 will be 1.170 billion yuan, 1.400 billion yuan and 1.613 billion yuan (the value before 20222023 will be 1.127 billion yuan and 1.404 billion yuan respectively), and the corresponding P / E ratio will be 61 times, 51 times and 44 times respectively. As the double leader of etching equipment and MOCVD, the company’s performance is expected to continue high growth and maintain the “recommended” rating.
Risk tips: (1) the risk that downstream customers’ investment in expanding production is less than expected. If the subsequent investment of downstream Fabs and LED chip manufacturers is less than expected, the purchase demand for relevant equipment will be weakened, which will affect the order volume of the company, and then adversely affect the performance of the company. (2) New product development is less than expected risk. If the company’s new product development is less than expected, it will affect the long-term development of the company. (3) International trade friction risk. In recent years, international trade frictions have continued. If the Sino US trade friction continues to deteriorate, the company’s production and operation will be affected to some extent. (4) Risk of changes in government subsidies. If the company cannot continue to receive government subsidies in the future or the government subsidies are significantly reduced, it will have an adverse impact on the company’s operating performance.
