\u3000\u3 Guocheng Mining Co.Ltd(000688) 233 Thinkon Semiconductor Jinzhou Corp(688233) )
The company released its annual report for 2021: in 2021, the company achieved a revenue of 474 million yuan (a year-on-year increase of 146.69%), and a net profit attributable to the parent company of 218 million yuan (a year-on-year increase of 117.84%); Among them, in the single quarter of 2021q4, the company achieved revenue of 124 million yuan (year-on-year growth rate of 57.55%, month on month growth rate of – 14.48%), and net profit attributable to the parent company of 50 million yuan (year-on-year growth rate of 16.55%, month on month growth rate of – 28.12%). The company’s main products are monocrystalline silicon materials for etching, which are used to produce silicon electrodes, which are the core consumables of wafer manufacturing and etching process. The company’s monocrystalline silicon materials for etching cover all specifications from 14 inches to 22 inches in diameter. They are internationally competitive, accounting for 82% of export sales. They are mainly sold to silicon parts processing plants in Japan, South Korea and other countries. The company’s global market share remains at 13% – 15%. With the accelerated construction of wafer factories outside China, TSMC, Samsung, Intel, Semiconductor Manufacturing International Corporation(688981) etc. have announced capital expenditure plans in 2022 ranging from billions to tens of billions of dollars, which is expected to drive the demand for upstream equipment and material manufacturers.
High speed growth of etched silicon materials and optimization of product structure: the company’s etched monocrystalline silicon materials will achieve a high-speed growth of 149.5% in 2021, and the production capacity is gradually increasing; The product structure continued to be optimized and upgraded, and the proportion of revenue from products with a higher profit margin of 16 inches and above further increased, from 23.75% in 2020 to 26.32% in 2021, with a gross profit margin of 75.82%. The increase in the proportion of large-size silicon materials has increased the unit price of monocrystalline silicon materials of the company from 222 yuan / piece in 2020 to 260 yuan / piece in 2022, which has made a great contribution to stabilizing the gross profit margin of the company. The global market share of the company in the large-diameter silicon material market for etching has also increased steadily on the original basis.
Expand silicon parts and semiconductor large-size silicon wafers: the market scale of large-diameter silicon materials for etching equipment is relatively small, about US $400500 million, which is mainly used to make silicon electrodes in plasma etching equipment. The scale of silicon electrode market is relatively larger, with a global value of about US $1-1.5 billion. The company’s products extend downstream to build a complete industrial chain from silicon materials to silicon parts. The company has strengthened cooperation with Chinese plasma etcher equipment manufacturers, Advanced Micro-Fabrication Equipment Inc.China(688012) and Naura Technology Group Co.Ltd(002371) to jointly develop a variety of silicon parts products suitable for different models. The company has obtained sample delivery and evaluation opportunities from many 12 inch integrated circuit manufacturers in China and obtained small batch orders. At the same time, the company actively expanded horizontally and used the funds raised from the listing to build 8-inch semiconductor grade silicon single crystal polishing chips with an annual production capacity of 1.8 million. The first phase of equipment installation and commissioning with a monthly capacity of 50000 pieces was completed in 2021. The production line was opened in January 2021, and the capacity gradually climbed. The products have passed the evaluation and certification of some Chinese customers. The production line is expected to be completed in February 2023. According to our calculation, under the condition of full production, it will contribute an annual income of 420 million yuan to the company.
Investment suggestion: as the raw material for manufacturing and processing semiconductor consumables, the company’s products are less affected by the local supply and demand of semiconductors, and have been sold to Japanese and Korean users in the high-end market, with high performance flexibility. The company has advanced semiconductor material market segments, with certain scarcity attributes. We are optimistic about the double pulling effect of global semiconductor expansion and domestic substitution on the company’s product demand. It is estimated that the operating revenue of the company from 2022 to 2024 will be RMB 656 million, RMB 868 million and RMB 1135 million respectively, with a year-on-year increase of 38.40%, 32.38% and 30.78%, and the net profit attributable to the parent company will be RMB 266 million, RMB 335 million and RMB 421 million respectively, with a year-on-year increase of 21.71%, 25.93% and 25.87%. At present (April 19, 2022), it corresponds to pe26.7% 10. 21.27 and 16.62 times, giving the company 57 times PE in 2022, corresponding to the target price of 94.62 yuan. For the first time, give a “buy” rating.
Risk tips: the risk of semiconductor expansion is less than expected, the risk of epidemic spread, the risk of deterioration of the international situation, and the construction of the company’s expansion project is less than expected
