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On March 31, Shanghai Wanye Enterprises Co.Ltd(600641) announced that the national integrated circuit industry investment fund phase II Co., Ltd. (large fund phase II) and the Shanghai semiconductor equipment and materials industry investment fund partnership (equipment and materials Fund) planned to increase the capital of Zhejiang praseodymium core, a joint-stock subsidiary of Shanghai Wanye Enterprises Co.Ltd(600641) with a total of 390 million yuan.
Leading semiconductor parts and components to help the upstream localization of equipment. In December 2020, Wanye United domestic and foreign investors to acquire 100% equity of compartsystems, the world’s leading semiconductor parts supplier, through Zhejiang praseodymium core, a joint-stock subsidiary. Compart is a global leader in the field of gas transmission system. Its main products include BTP (builttoprint) components, assemblies, seals, gas rod assemblies, gas flow controllers (MFC), weldments, etc. its products are used for accurate gas transmission system required by oxidation / diffusion, etching and deposition equipment in integrated circuit manufacturing process. It is one of the few companies in the world that can complete all links of precision processing of parts and components in this field. In the first half of 2021, compart’s products were also introduced into the supply chain of China semiconductor equipment company to help local equipment enterprises localization.
With the combination of strong and strong, large funds laid out the semiconductor parts track for the first time. This capital increase is another strengthening of cooperation between Wanye and national strategic investors, which is conducive to the company’s long-term development strategy. The capital increase is made by the second phase of the large fund and the equipment and materials fund. Among them, the first phase of the national large fund is the major shareholder holding 5% equity of Wanye, while the equipment and materials fund is established with the participation of Pudong Science and technology investment and Shanghai Wanye Enterprises Co.Ltd(600641) Co., Ltd., the controlling shareholder of Wanye. After the capital increase, Shanghai Wanye Enterprises Co.Ltd(600641) holds 29.63% of the equity of Zhejiang praseodymium core and remains the largest shareholder. The second phase of the large fund becomes the fourth largest shareholder and holds 17.28% of the equity of Zhejiang praseodymium core. The second phase of the big fund was established in 2019. It continued to give full play to its strength as a national strategic investor and invested in a number of enterprises in the field of semiconductor manufacturing and semiconductor equipment. This investment in Praseodymium core is the first time it has entered the semiconductor parts track in the upstream layout of semiconductor equipment, which shows the important strategic significance of the company’s business. According to our calculation, the market scale of semiconductor precision parts is about 30-40% of the market scale of semiconductor equipment, corresponding to the global market scale of about US $30 billion in 2021.
The platform continues to expand, and a variety of equipment categories are ready to go. In recent years, Wanye has continued to expand the transformation of semiconductor business through epitaxial growth. Kaishitong is Wanye’s first successful attempt in the process of investment, M & A and transformation of semiconductor business. In April 2021, Wanye and Ningbo Xinen jointly established a subsidiary Jiaxin semiconductor, and announced an investment plan of RMB 2 billion in December, establishing 6 subsidiaries and 2 business divisions to carry out etching machine, RTP, film, single chip / trough cleaning, tail gas treatment, mechanical arm and other businesses. So far, the company has formed a product line coverage from equipment to parts through three subsidiaries, and built a semiconductor equipment platform with rich categories.
Investment suggestion: we expect that the company’s revenue in 2021, 22 and 23 will be RMB 1.00116462226 billion respectively, corresponding to 20 / 12 / 9 times of the current stock price PS respectively. Considering that the company is a platform based integrated circuit equipment supplier in China, the equipment business of each category is in a rapid start-up stage, which is expected to maintain a high growth rate and maintain the “recommended” rating.
Risk warning: product verification is not as expected; Cyclical fluctuations in downstream industries; Market competition intensifies.
