\u3000\u3000 Jiangyin Jianghua Microelectronics Materials Co.Ltd(603078) (603078)
Event: the company announced on January 10, 2022 that the wholly-owned subsidiary Jiangyin Jianghua Microelectronics Materials Co.Ltd(603078) (Zhenjiang) Electronic Materials Co., Ltd. had an annual output of 228000 tons of ultra-high purity wet electronic chemicals, a by-product of 7000 tons of industrial chemicals and the regeneration project in phase I of the regeneration project had obtained the hazardous waste business license, The approved operation includes comprehensive utilization of waste stripping liquid (hw06900-402-06, 900-404-06) and waste N-methylpyrrolidone (hw06900-404-06) (trial operation).
The hazardous waste license was successfully obtained, and the capacity release of Zhenjiang G5 can be expected. The company announced on October 30, 2021 that the trial production of the wholly-owned subsidiary Jiangyin Jianghua Microelectronics Materials Co.Ltd(603078) (Zhenjiang) Electronic Materials Co., Ltd. with an annual output of 228000 tons of ultra-high purity wet electronic chemicals, a by-product of 7000 tons of industrial grade chemicals and phase I of the regeneration project (an annual output of 25000 tons of electronic grade sulfuric acid and 5000 tons of electronic grade ammonia) has passed the expert review and meets the trial production conditions, Today, the company’s recycling project has obtained the hazardous waste operation license again. At present, the company’s 58000 ton G5 wet electronic chemical production capacity in Zhenjiang has obtained the trial production license, and the production is no longer constrained, which is conducive to the company to speed up the adjustment of production line and the high-end production capacity can be expected.
The release of 12 inch wafer capacity and the improvement of OLED penetration drive the strong demand for wet electronic chemicals. According to the statistical data of core idea and ittbank, by the second quarter of 2021, China’s existing crystal moon production capacity is about 6.38 million pieces, including 1.18 million pieces of 12 inch crystal moon and 1.2 million years of 8-inch crystal moon. The planned production capacity of the crystal moon is about 1.59 million pieces, including 1.32 million pieces of 12 inch crystal moon and 270000 pieces of 8-inch crystal moon. Combined with the above data, we estimate that the demand for wet electronic chemicals in China’s semiconductor industry will reach 957100 tons in 2024, more than twice the demand in 2020. Meanwhile, the consumption of OLED wet electronic chemicals in the same area is 7 times that of LCD. With the continuous expansion of OLED production capacity and the continuous improvement of its penetration rate, the demand for wet electronic chemicals in the panel industry will also grow rapidly in the future.
Domestic wet electronic chemicals leader, three bases layout molding, strengthen the company’s competitiveness. It is one of the leading enterprises in the electronics industry with the most complete production capacity of wet chemicals and wet chemicals in China. At present, the company has three production bases, namely Jiangyin headquarters, Meishan, Sichuan and Zhenjiang, Jiangsu, with a total production capacity of 208000 tons. Among them, Jiangyin headquarters has a capacity of 90000 tons of wet electronic chemicals. Its products are widely used in semiconductor industry and display panel industry, which is a stable source of the company’s profits. Meishan factory has a production capacity of 60000 tons of wet electronic chemicals and goes deep into supporting panel customers in Chengdu, Chongqing, Xi’an and other southwest regions, which is a pole of future profit growth of the company. Zhenjiang factory (phase I) has a wet electronic chemical production capacity of 58000 tons, focusing on the high-end integrated circuit industry. With the large volume of Zhenjiang G5 wet electronic chemicals, it will help the company seize the 12 inch high-end wet electronic chemical market and build the core competitiveness for the company.
Profit forecast: from 2021 to 2023, the company is expected to realize operating revenue of RMB 794 million, RMB 1573 million and RMB 2064 million respectively, and net profit attributable to parent company of RMB 48 million, RMB 163 million and RMB 228 million, corresponding EPS of RMB 25 million, RMB 83 million and RMB 1.16 respectively. Considering the significant new capacity of downstream wafer plants, high-end G5 wet electronic chemicals are expected to usher in a period of strong demand. The company is the industry leader of domestic wet electronic chemicals. With the advantages of full category layout and the high technical barriers of G5 wet electronic chemicals, the company is expected to enter the period of rapid performance release. Referring to the average valuation of domestic electronic materials, we give the company 43-47 times PE in 2022, the target market value range of the company in 2022 is 7.009-7.661 billion yuan, and the target stock price range is 35.69-39.01 yuan, maintaining the “recommended” rating of the company.
Risk tip: the price of raw materials fluctuates, power and production restriction intensifies, industry competition intensifies, the project is put into operation less than expected, G5 capacity verification is less than expected, and domestic substitution is less than expected.
