Tuojing Technology (688072)
Focus on film deposition equipment with outstanding technical strength: the company is the leader of film deposition equipment in China. Its products include PECVD, sacvd and ALD equipment. The revenue in 2021 was 675 million yuan, 41 million yuan and 29 million yuan respectively, of which PECVD accounted for 89% of the revenue. The company is the first manufacturer of semiconductor chip and dfam integrated circuit in China, and has reached the level of the same kind of chip manufacturing in the industry of SAMC / dn81. According to the public bidding information disclosure, from 2019 to 2020, the number of winning machines of PECVD equipment of the company accounted for 16.65% of the total bidding volume of Changjiang storage, Shanghai Huali, Wuxi Huahong and Shanghai Jita.
Revenue grew rapidly and profitability continued to improve: the company’s revenue grew from 71 million yuan in 2018 to 758 million yuan in 2021, an increase of nearly 10 times in three years. In terms of profitability, the company’s gross profit margin and net profit margin have shown a continuous upward trend for many years, from 31.67% in 2018 to 44.01% in 2021, and the net profit margin has increased from – 146.12% in 2018 to 8.83% in 2021. In 2022q1, the company achieved a revenue of 108 million yuan, a year-on-year increase of + 86.21%, and the gross profit margin further increased to 47.44%.
Thin film deposition equipment is the core equipment of wafer manufacturing and continues to benefit from the upward capital expenditure: thin film deposition equipment is one of the three main equipment of wafer manufacturing. According to semi data, its investment scale accounted for 25% of the total investment of wafer manufacturing equipment in 2020, and the market demand is closely related to the capital expenditure of wafer factories. Driven by the continuous growth of global semiconductor capital development, the market scale of thin film deposition equipment is expected to continue to expand. According to the statistics of maximizemarketresearch, the global semiconductor thin film deposition market has a market space of about US $12.5 billion in 2017 and is expected to reach US $34 billion by 2025, with a compound annual growth rate of 13.3%. From the perspective of the market structure of film deposition equipment, according to the company’s prospectus data, CVD equipment accounted for 77% of the film deposition equipment market in 2019, of which PECVD accounted for 33% of the overall market, ahead of other types of equipment, and ALD equipment accounted for 11%. In addition, PVD equipment accounts for 25% of film deposition equipment.
There is much room to improve the domestic rate of semiconductor equipment, and Chinese enterprises are expected to continue to benefit: from the perspective of the Chinese market, according to semi data, the global market scale of film deposition equipment in 2020 is US $17.2 billion, and China’s semiconductor equipment market accounts for 26.29% of the global market. If this ratio is calculated, the market scale of China’s film deposition equipment in 2020 is about US $4.522 billion. Overall, the localization rate of Chinese mainland semiconductor equipment is in a relatively low stage. China’s semiconductor equipment sales in 2020 were about 21 billion 300 million yuan, and the self-sufficiency rate was about 17.5%, according to the statistics of China Electronic Equipment Industry Association. With the continuous growth of capital expenditure in China’s fab, the Chinese mainland’s semiconductor equipment enterprises are expected to grow rapidly with the increase of the localization rate.
Overseas giants monopolize film deposition equipment, and Chinese enterprises catch up quickly: from the perspective of competition pattern, the film deposition equipment industry is basically monopolized by overseas manufacturers such as applied materials (Amat), ASMI, pan forest semiconductor (LAM), Tokyo Electronics (TEL), ASMI and other international giants. According to Gartner statistics, in 2019, applied materials accounted for 85% of the global PVD market and were in an absolute leading position; In the CVD market, applied materials, Fanlin semiconductor and Tel account for 30%, 21% and 19% of the global market respectively. The three major manufacturers account for 70% of the global market share. In ALD devices, Tel and ASMI occupy 31% and 29% of the market share respectively, and the remaining 40% is occupied by other manufacturers. At present, the companies engaged in thin film deposition equipment in China mainly include Naura Technology Group Co.Ltd(002371) , tuojing technology, Advanced Micro-Fabrication Equipment Inc.China(688012) , shengmei Shanghai, etc., of which Naura Technology Group Co.Ltd(002371) has laid out LPCVD, ALD and PECVD. The strength in the field of PVD equipment is outstanding, and tuojing technology has laid out PECVD, ALD and sacvd, leading in China. Compared with overseas leaders, Chinese enterprises have a small share and are in a state of rapid catch-up. Their share in Chinese wafer factories has increased rapidly. They are expected to continue to benefit from the localization trend of semiconductor equipment in the future.
Investment suggestion: we estimate that the company’s revenue from 2022 to 2024 will be 1.146 billion yuan, 1.568 billion yuan and 1.920 billion yuan respectively, and the net profit attributable to the parent company will be 104 million yuan, 197 million yuan and 268 million yuan respectively, giving the “Buy-A” investment rating.
Risk tip: downstream demand attenuation risk, market competition intensified risk, domestic substitution is less than expected.
