Shengmei Shanghai (688082)
[key points of investment]
In 2021, the company’s revenue and net profit attributable to the parent company increased by 61% and 35% respectively year-on-year. The company released the annual report of 2021. The annual revenue of the company was 1.62 billion yuan, with a year-on-year increase of 60.9%, the net profit attributable to the parent was 270 million yuan, with a year-on-year increase of 35.3%, the gross profit margin was 42.5%, with a year-on-year decrease of 1.2pct, and the net profit attributable to the parent was 16.4%, with a year-on-year decrease of 3.1pct.
Platform type semiconductor equipment manufacturers are marching forward in business. By product, in 2021, the revenue of semiconductor cleaning equipment was 1.06 billion yuan, with a year-on-year increase of 29.3%. The revenue of other semiconductor equipment (electroplating, vertical furnace tube, stress-free copper throwing and other equipment) was 270 million yuan, with a year-on-year increase of 352.4%. The revenue of advanced packaging wet equipment was 220 million yuan, with a year-on-year increase of 121.0%. We believe that the company is one of the few platform semiconductor equipment manufacturers in China, and its rich product line can help the company’s business move forward.
The gross profit margin of other semiconductor equipment increased by 17.7pct year-on-year. In 2021, the company’s gross profit margin decreased by 1.2pct year-on-year, mainly due to the decrease of 0.7pct and 8.9pct year-on-year for semiconductor cleaning equipment and advanced packaging wet equipment respectively. The gross profit margin of other semiconductor equipment (electroplating, vertical furnace tube, stress-free copper throwing and other equipment) increased by 17.7pct to 42.5% year-on-year, which we believe may be due to the large-scale effect of products.
R & D helps to continuously improve the product matrix. In 2021, the company’s R & D expense rate increased by 3.2pct to 17.2% year-on-year, mainly due to the improvement of existing products and process development, as well as the development of new products and processes, the corresponding R & D material consumption increased, the number of R & D personnel increased, and the salary paid increased accordingly. At present, the company has covered all single-chip wet equipment in the product field of advanced packaging industry. The electroplating equipment independently developed with global intellectual property protection has been verified by downstream customers. The electroplating equipment used for later advanced packaging has entered the market and obtained repeated orders.
Semiconductor products gradually enter the head of customers. The company provides customized equipment and process solutions for global wafer manufacturing, advanced packaging and other customers, and has formed a relatively stable cooperative relationship with leading enterprises in China’s semiconductor industry, such as Hynix, Changjiang storage, Huahong group, Semiconductor Manufacturing International Corporation(688981) and Jcet Group Co.Ltd(600584) and so on.
[investment suggestions]
The company focuses on the production, research and development of semiconductor equipment, and benefits from the expansion of semiconductor capacity. The growth of semiconductor equipment industry is expected to be expected. Meanwhile, the scale and technology level of semiconductor industry in mainland China has been continuously improved. As one of the leading semiconductor equipment companies in Chinese mainland, the growth of revenue is waiting for the bloom. According to the SEMI report of the world semiconductor equipment market, Shanghai global sales volume is expected to grow by 11% in 2022. The company is one of the top five enterprises in the Chinese mainland for the manufacture of semiconductor equipment in 2020. Some core technologies have reached the international advanced level or the advanced level in the world. We are judged to be able to fully enjoy the growth bonus of the high barrier industry. We estimate that the company’s revenue from 2022 to 2024 will be 2.60/37.8/5.08 billion yuan, the net profit attributable to the parent company will be 4.2/6.1/820 billion yuan, the EPS will be 0.97/1.40/1.88 yuan, and the PE corresponding to the current stock price will be 95.32/66.33/49.33 times, giving the company a “overweight” rating.
[risk tips]
ACMR, the controlling shareholder of the listed company, has been listed in the provisional list of relevant issuers with delisting risk by the SEC due to the problem of the audit firm employed.
The development progress of new products is less than expected.
