\u3000\u3 Guocheng Mining Co.Ltd(000688) 268 Guangdong Huate Gas Co.Ltd(688268) )
Event: on April 29, the company issued the plan for issuing convertible corporate bonds to unspecified objects. The total amount of funds raised by the proposed issuance of convertible corporate bonds does not exceed RMB 646 million, which is used for the construction project of 1764 tons of semiconductor materials per year, the construction project of R & D center and supplementary working capital.
It is proposed to issue convertible bonds and expand the capacity of Jiangxi base. The company plans to issue convertible corporate bonds to raise no more than 646 million yuan, of which 383 million yuan is used for the construction project of 1764 tons of semiconductor materials per year, 73 million yuan is used for the construction project of R & D center, and 190 million yuan is used to supplement working capital. In order to deepen the company’s business layout in the field of high-end semiconductor materials and improve the company’s product coverage and comprehensive competitiveness, the company will expand the production base on the existing spare space through Jiangxi Huate to expand the existing production scale of special gases. The main body of the project is Jiangxi Huate Electronic Chemicals Co., Ltd., a wholly-owned subsidiary of the company. The construction period is expected to be 2 years, with a total investment of 466 million yuan. After completion, 1764 tons of high-purity carbon monoxide, high-purity nitric oxide, hexafluoropropane and isomers, hydrogen bromide, boron trichloride, ultra-high-purity hydrogen, ultra-pure krypton, ultra-pure neon, ultra-pure helium and ultra-pure xenon will be produced. The re expansion of Jiangxi base marks the company’s determination to seize the development opportunities of the industry and make sufficient preparations for the upcoming upsurge of wafer expansion.
Lay the foundation of high-quality customers and lay the development prospect. The target customers of the fund-raising investment project are highly coincident with the existing customer resources of the company. At present, the company has successfully achieved more than 80% customer coverage for Chinese integrated circuit manufacturers with more than 8 inches, solved the import constraints of various gas materials for customers such as Changjiang storage, Semiconductor Manufacturing International Corporation(688981) Huahong Hongli, China Resources Microelectronics Limited(688396) electronics and TSMC (China), and entered the supply chain system of global leading semiconductor enterprises such as Intel, micron technology, Texas Instruments, SK Hynix and Infineon. We believe that the raised investment project is based on the company’s high-quality customer base, has broad market prospects for capacity digestion, and is expected to further increase profits after it is put into operation.
Based on research and development, never forget the original intention and continue to cultivate deeply. At present, the company has more than 200 kinds of gas production capacity, but there is still a certain gap in product coverage compared with international giants. The project plans to invest 76.65 million yuan to build the R & D center. On the one hand, it will enhance the company’s core technology reserves and develop more categories of special gases, precursors and other semiconductor materials; On the other hand, meet the company’s growing demand for R & D plants and equipment. As of March 31, 2022, the company has 157 authorized patents, including 21 invention patents, 133 utility model patents and 3 design patents. Based on the existing experience, the company can quickly and accurately grasp the industry trend to consolidate its first mover advantage.
Investment suggestion: the company’s earnings per share from 2022 to 2024 are expected to be 1.48, 2.13 and 2.90 yuan respectively, corresponding to 32, 23 and 17 times of PE respectively, maintaining the “buy” rating.
Risk tips: the downstream demand is less than expected, the risk of foreign exchange fluctuation, the progress of production expansion projects is less than expected, and the expansion of new customers is less than expected.
