\u3000\u3 Bohai Water Industry Co.Ltd(000605) 358 Hangzhou Lion Electronics Co.Ltd(605358) )
The company is a leading semiconductor silicon wafer manufacturer in China. Based on the upstream materials, it extends downward. At present, its main business includes three business segments: semiconductor silicon materials, semiconductor power devices and compound semiconductor RF chips. It has a relatively complete industrial chain. The company’s main products include 6-12 inch semiconductor silicon polishing wafer and silicon epitaxial wafer, 6-inch Schottky chip and MOSFET chip, and 6-inch GaAs microwave RF chip. After more than 20 years of development, it has developed into one of the few one-stop manufacturing platforms from silicon wafer to chip in China, forming a business model in which profitable small-size silicon wafer products drive the R & D and industrialization of large-size silicon wafer, and mature semiconductor silicon wafer business and semiconductor power device business drive the compound semiconductor RF chip industry.
The supply and demand pattern of silicon wafers continues to be tight, large overseas manufacturers will have full orders in the next five years, and domestic silicon wafer manufacturers have entered a golden period of development. Since 2020, with the outbreak of the epidemic, the rise of home office, online education and other applications has driven the development of the semiconductor industry, and silicon wafers began to enter the growth period again. We judge that with the development of 5g, Internet of things, new energy vehicles, photovoltaic and other fields, the high demand for silicon wafers will remain stable for a long time in the future. According to sumco data, at the end of 2021, the global demand for 8-inch silicon wafers was about 6 million Wafers / month, and the demand for 12 inch silicon wafers was about 7.5 million Wafers / month. The terminal application market led by 5g smart phones and data centers will continue to rise in the future. It is expected to jointly promote the global demand for 12 inch silicon wafers to reach 9.35 million Wafers / month in 2025. At present, the orders of some large overseas factories have been scheduled to 2026. With the third industrial transfer of the semiconductor industry to China, the replacement of domestic silicon wafers is at the right time. From 2021 to 2022, the world will add 29 wafer factories to meet the market demand for semiconductor chips, of which 16 are in China, driving the high growth of the demand for domestic equipment and materials. We expect that in 2022, the demand for 8 inch and 12 inch silicon chips in Chinese mainland will reach 1 million 10 thousand pieces per month and 1 million 340 thousand pieces / month, and it is expected to reach about 1 million 600 thousand pieces per month and 1 million 800 thousand pieces per month in 2025. At present, only a few manufacturers of 8-inch silicon wafers in China can achieve large-scale production, and the localization rate of 12 inch silicon wafers is less than 10%, which is in urgent need of domestic substitution and acceleration. Under the current tight global supply and the situation that large overseas manufacturers give priority to ensuring the orders of large international wafer manufacturers, we expect that the product verification of downstream customers of domestic wafer manufacturers will be accelerated, and the high price of silicon wafers will be superimposed. 2022 and 2023 will usher in a golden development period.
The rapid development of new energy vehicles and photovoltaic drives the continuous shortage of power semiconductors. The main products of the company’s power sector are SBD, MOSFET and TVs. SBD is mainly used in the automotive field and MOSFET is used in the photovoltaic field. With the rapid development of new energy vehicles, photovoltaic and other downstream products, the company’s photovoltaic products accounted for 46% of the total annual shipments of power devices in 2021 and 43% – 47% of the global sales of photovoltaic chips in 2021. The shipments of grooved chips increased significantly, with a year-on-year increase of 260%, and the planar Schottky increased by 170%. The orders of Schottky and MOS chips far exceeded the production capacity, maintaining full production and sales throughout the year, and the supply exceeded the demand. At present, according to the latest data of ecia, in the global average delivery cycle of semiconductors in February 2022, power semiconductors continue to rise. At present, the average delivery days exceed 200 days, supply and demand continue to fall short of demand, and the price of power products is expected to be further increased. In the future, with the company’s new product FRD with higher added value gradually passing the customer verification, as well as the capacity climbing of the power sector, superimposing the high price under the high scenery of 2022, the company’s power business will open the second growth curve.
The advantages of industrial chain integration are obvious, and the company’s three major businesses are expected to usher in performance take-off. In terms of silicon materials: the company’s production capacity has been further improved after the technical transformation of 6-inch polished wafers. The 8-inch polished wafers will release greater production capacity after the new equipment climbs to the production capacity. The technical capacity of 12 inch silicon wafers has covered the logic circuit of technical nodes above 14nm. The power and image sensor parts cover the technical nodes required by customers and have been shipped on a large scale. With the further improvement of 12 inch production capacity in 2022, the company’s silicon material performance is expected to grow high. In terms of power devices, the production and sales of the company’s vehicle specification level power device chips and photovoltaic bypass diode control chips have increased significantly, and the climbing of the 22-year-old line will release greater performance flexibility. The production and sales of compound semiconductor RF chips will also increase steadily. We believe that as a leading manufacturer of semiconductor upstream materials in China, the company has strong technical strength and has advantages in independent intellectual property rights, product scale, customers, brands and talents. With the rapid development of downstream demand fields such as 5g, new energy vehicles and aiot, as well as the continuous shortage of silicon wafer demand for the expansion of full spherical wafer plant, the company superimposes the performance increment brought by the ramp up of production capacity under the background of domestic substitution, The overall development space of the company is broad.
Investment suggestion: considering the high prospect of the silicon wafer industry and combined with the announcement of the company’s performance increase in the first quarter of 2022, we raised the profit forecast. It is expected that the company will realize the net profit attributable to the parent company of 1.052 billion yuan, 1.424 billion yuan and 1.671 billion yuan from 2022 to 2024, corresponding to 38, 28 and 24 times of PE (the original forecast for 22-24 years is 973 / 12.75 / 1.517 billion yuan). The company is one of the leading manufacturers in the mainland silicon material industry. Under the background of localization, the downstream demand is strong, The product structure was continuously optimized, with both scarcity and growth, and the “buy” rating was maintained.
Risk tip: the prosperity of silicon wafer and power may be less than expected, the expansion of new production capacity may be less than expected, the price rise risk of upstream raw materials, and the use information of the research report is not updated in time.
