Changguang Huaxin (688048)
Semiconductor laser chip IDM leader, horizontal and vertical expansion of business layout. The company is mainly engaged in the research and development of laser components, semiconductor modules and other core industries. The company has built IDM whole process process platforms covering chip design, epitaxial growth, wafer processing (lithography), cleavage / coating, packaging test, optical fiber coupling and so on. The mass production line includes 3-inch and 6-inch, which are applied to the development of a variety of semiconductor laser chips, with large-scale advantages and lower cost. The company has formed technical barriers and is one of the few companies that develop and mass produce high-power semiconductor laser chips. 1) Horizontal expansion: two product platforms of high-efficiency VCSEL laser chip and high-speed optical communication chip have been established. 2) Vertical extension: from laser chips to devices, modules and direct semiconductor laser applications. The company expects the operating revenue of 2022q1 to be 90 million yuan ~ 110 million yuan, with a year-on-year increase of 16.20% ~ 42.02%; It is estimated that the net profit attributable to shareholders of the parent company in 2022q1 will be 20 million yuan ~ 30 million yuan, with a year-on-year increase of 5.50% ~ 58.25%. The raised investment project is mainly used for the capacity expansion of high-power laser chips, devices and modules, and the industrialization project of vertical cavity surface emitting semiconductor laser (VCSEL) and optical communication laser chips.
With the rise of domestic fiber laser manufacturers, the localization of laser chips is the general trend. According to the development report of China’s laser industry in 2021, China’s fiber laser market is expected to grow from 7.74 billion yuan in 2018 to 10.86 billion yuan in 2021, with CAGR of 11.95%. In 2020, the total share of Wuhan Raycus Fiber Laser Technologies Co.Ltd(300747) , Chuangxin laser and other domestic manufacturers was about 57.00%, an increase of 17.10pct compared with 2018, and domestic manufacturers have accounted for half of the country. However, due to the intensification of Sino US trade frictions, Wuhan Raycus Fiber Laser Technologies Co.Ltd(300747) , Han’S Laser Technology Industry Group Co.Ltd(002008) etc. are listed in the embargo list, and the localization of upstream chips is accelerated. In 2020, Changguang Huaxin accounted for 13.4% of China’s high-power semiconductor laser chip market share and 3.88% of the global market share. China’s leading position in semiconductor laser chips is stable. With the characteristics of high power, high efficiency, high brightness and high reliability of semiconductor laser chips, the company has been affirmed by downstream customers and increased viscosity. It has successfully broken the situation of “instrument without core” for China’s laser field.
3D sensing + lidar is in the ascendant, and vscel opens up a new battlefield. VCSEL was initially used for optical communication, and 3D sensing and lidar applications are in the ascendant. According to yole’s data, compared with the market size of US $1.1 billion in 2020, VCSEL laser is expected to grow to US $2.7 billion in 2025, with a CAGR of 19.67%. VCSEL market presents a situation of one super and many strong, and Cr5 occupies 92% of the overall market share in 2019. As the first manufacturer of VCSEL chip in China, Changguang Huaxin has established a complete process line including epitaxial growth, strip etching, end face coating, dicing and splitting, characteristic test, packaging screening and chip aging. It has the manufacturing capacity of corresponding products. The company’s products have sent samples to several major customers in China.
Investment suggestion: we expect the company’s revenue to be RMB 785 / 1093 / 1435 million in 22-24 years, and the net profit attributable to the parent company to be RMB 200 / 3.0 / 410 million, corresponding to 46 / 31 / 23 times of PE. The PE of the company in 22 years is lower than the average value of comparable companies ( Sanan Optoelectronics Co.Ltd(600703) , Hangzhou Silan Microelectronics Co.Ltd(600460) , torch technology, Wuhan Raycus Fiber Laser Technologies Co.Ltd(300747) ). The company is the leader of domestic semiconductor laser chips and opens up a new battlefield for 3D sensing + lidar. It is covered for the first time and given a “recommended” rating.
Risk tip: the risk of intensified industry competition, the progress of new product research and development is less than expected, the pace of domestic substitution is slow, and the operation of raised projects is less than expected.
