\u3000\u3 Guocheng Mining Co.Ltd(000688) 012 Advanced Micro-Fabrication Equipment Inc.China(688012) )
Core view
The performance of etching equipment and MOCVD equipment enterprises with global competitiveness continues to improve: the company is one of the first listed enterprises on the science and innovation board, mainly producing integrated circuit etching equipment and led MOCVD equipment. In terms of etching equipment, the company has successively developed capacitive and inductive plasma etching machines. In terms of MOCVD equipment, the company’s early products were applied to blue-green led and power devices, and later expanded to the field of deep UV LED and high-end miniled. Benefiting from the development of semiconductor equipment market and the competitive advantages of the company’s products, the company achieved a revenue of 3.1 billion yuan in 2021, a year-on-year increase of 37%, and a net profit attributable to the parent company of 1.01 billion yuan, a year-on-year increase of 105%.
Domestic substitution superposition capacity expansion ushered in opportunities for the company’s etching equipment: from the downstream end, the emerging applications represented by the Internet of things driven a new round of growth of the semiconductor industry, resulting in huge equipment market demand. From the technical side, the chip process upgrading and process improvement put forward higher requirements for the quantity and quality of etching equipment. From the demand side, affected by global trade frictions, domestic equipment is favored by Chinese wafer manufacturers. The company’s etching equipment has entered TSMC and other world-class wafer factories, and gradually broke the monopoly of international etching giants in China. Taking Changjiang storage as an example, among the etching equipment publicly tendered in 2020, Advanced Micro-Fabrication Equipment Inc.China(688012) won the bid, accounting for 14%, ranking second.
Broad application of LED drives the performance growth of MOCVD equipment: Mini / micro LED is becoming the development direction of display technology. At present, miniled technology is gradually maturing and has been widely used in medium and high-end LCD backlight and LED display. In addition, the deep ultraviolet LED used in the field of disinfection and sterilization has a huge market opportunity. The company has launched prismo hit3 applied to the production of deep UV LED epitaxial wafers ™ Devices and prismo Unimax for miniled ™ Equipment, bringing new performance growth points. December 2021 prismo Unimax ® MOCVD equipment orders have exceeded 100 cavities.
Endogenous extension to build a platform company: in terms of endogenous development, the company has established a team to develop EPI and LPCVD equipment; In terms of epitaxial layout, the company has invested in Ruili instrument (testing), tuojing Technology (thin film deposition) and ideal wanlihui ( Cecep Solar Energy Co.Ltd(000591) battery) and other companies, and actively explored other joint venture and cooperation opportunities.
Profit forecast and investment suggestions
We predict that the company’s earnings per share from 2022 to 2024 will be 1.58 yuan, 2.23 yuan and 3.11 yuan respectively. The decline of earnings per share in 22 years is mainly due to the conservative prediction of non recurring profit and loss items in consideration of the uncertainty of non recurring profit and loss. Considering the wide replacement space of domestic etching equipment, the absolute valuation method (FCFF) is adopted to give a target price of 172.28 yuan and a buy rating for the first time.
Risk tips
The localization progress of etching equipment is less than expected; The prosperity of semiconductor equipment industry is lower than expected; Miniled demand is lower than expected; The decline risk of government subsidies; Risk of parts supply interruption.
