\u3000\u30 Chongqing Baiya Sanitary Products Co.Ltd(003006) 66 Konfoong Materials International Co.Ltd(300666) )
Konfoong Materials International Co.Ltd(300666) : China’s leading high-purity sputtering target Konfoong Materials International Co.Ltd(300666) is a leading supplier of high-purity sputtering targets in China. Its main products include aluminum targets, titanium targets, tantalum targets, tungsten titanium targets, etc. In addition, the company also has consumables and semiconductor parts business, including carbon fiber composite parts for LCD, CMP consumables, semiconductor parts and other products. From 2018 to 2021, the company’s revenue increased from 650 million yuan to 1.59 billion yuan, with an average annual compound growth rate of 34.76%. Overseas revenue accounted for the main body, and the revenue of H1 overseas customers accounted for 60% in 2021. In terms of organizational structure, the company has carried out extensive business upstream and downstream layout, and a number of holding / participating subsidiaries carry out target raw material production and R & D, material processing, parts processing and other businesses respectively. In August 2021, the company issued a total of 517 million yuan of convertible bonds to expand the production capacity of panel targets and components. In December, the company announced the fixed increase plan again, and planned to raise no more than 1.65 billion yuan to invest in the construction of production lines dominated by target business.
The target market has a broad space, and Jiang Feng leads the localization. Sputtering target is the main consumable of PVD process, which is widely used in semiconductor, flat panel display, photovoltaic and other fields. Among them, the barrier of semiconductor target is relatively high. According to semi data, the global market space of semiconductor sputtering target in 2019 was US $2.87 billion, accounting for 8.8% of the total sales of global integrated circuit materials. Sputtering targets for semiconductors have strict requirements on material purity, compactness, grain size and uniformity, microstructure and other aspects, which are manifested in the difficulty of processing technology and the demand for high-end material processing equipment. The market has been monopolized by a few enterprises in the United States and Japan for a long time Konfoong Materials International Co.Ltd(300666) after long-term research and development and equipment introduction, it has filled the technical gap of similar products in China and gradually become internationally competitive. The company’s copper manganese alloy target has successfully passed the evaluation and obtained batch orders at important clients in China. HCM copper target has obtained batch orders from world-class chip OEM manufacturers, and the manufacturing node has entered the advanced 5nm technology node. In addition to the target production capacity, the independent supply of raw materials is also the embodiment of the company’s core competitiveness in the target industry. In order to solve the problem of relying on outsourcing of raw materials, Jiangfeng has actively carried out upstream layout and promoted the localization of raw materials. In 2020, affiliated companies Shanghai Tongchuang and Ningbo chuangrun have become the fourth and fifth raw material suppliers of the company.
Draw the second growth curve of semiconductor parts. Since 2021, the prosperity of semiconductor equipment market has led to the growth of demand for equipment parts. According to our calculation, the market scale of precision parts of semiconductor equipment is about 30-40% of the market scale of semiconductor equipment, corresponding to the market scale of parts in 2021, which is about 30 billion US dollars. The market is highly fragmented, including structural parts and seals of machinery, pipes and valves of vacuum system, etc. Based on the high-purity material production and precision processing technology accumulated in the main target industry, Jiangfeng has expanded PVD pressure ring, collimator, CVD cavity, sprinkler head, CMP consumables and other parts and products, and the growth space has been fully opened.
Investment suggestion: Konfoong Materials International Co.Ltd(300666) is the leader of high-purity sputtering target in China and the leader of target localization. As the company further expands its business scope, the semiconductor equipment parts and consumables business will also bring more increment to the company’s performance. We expect that the company will achieve a revenue of RMB 1.590/2.367/3.286 billion and a net profit attributable to the parent of RMB 110 / 2.11/369 million from 2021 to 2023, corresponding to the current price of pe117 / 61 / 35 times from 2021 to 2023. We are optimistic about the long-term growth of the company’s businesses, cover them for the first time and give a “recommended” rating.
Risk warning: product verification is not as expected; Cyclical fluctuations in downstream industries; Market competition intensifies.
