\u3000\u3 China Vanke Co.Ltd(000002) 371 Naura Technology Group Co.Ltd(002371) )
The company released the annual report of 2021 and the first quarterly report of 2022: in 2021, the company realized an operating revenue of 9.683 billion, a year-on-year increase of + 59.90%, and realized a net profit attributable to the parent of 1.077 billion yuan, a year-on-year increase of + 100.66%, deducting a net profit not attributable to the parent of 807 million yuan, a year-on-year increase of + 309.45%. 2022q1 company continued the trend of high growth in the previous year. Q1 achieved an operating revenue of 2.136 billion yuan, a year-on-year increase of + 50.04%, and a net profit attributable to the parent company of 206 million yuan, a year-on-year increase of + 183.18%. The company’s quarterly revenue shows a trend of low in the first and high in the second. Under the condition of high base of Q1 performance, the performance in 2022 will be released quarter by quarter and is expected to maintain a high level.
China is a leader in semiconductor equipment, with a high increase in equipment revenue and a continuous improvement in profitability. The company’s main business is electronic process equipment and electronic components, accounting for 82.08% and 17.71% of the revenue in 2021 respectively. As a leading equipment platform company, it has rich product systems, covering main equipment such as etching machine, PVD / CVD / ALD, furnace tube equipment, cleaning equipment and so on. In 2021, the operating revenue of northern microelectronics, a subsidiary mainly engaged in semiconductor equipment, was 7.121 billion yuan, a year-on-year increase of + 71.39%, and the net profit of the subsidiary was + 224.80%. In terms of gross profit margin, in 2021, the company’s comprehensive gross profit margin was 39.41%, with a year-on-year increase of 2.72 PCT, of which the gross profit margin of process equipment was 33.0%, with a year-on-year increase of 3.56 PCT, and the downstream demand for electronic components was strong, maintaining a high gross profit margin of 68.90%. In 2022q1, the company’s comprehensive gross profit margin was further increased to 44.64%.
The industry demand continues to be superimposed with domestic substitution, and the company has full orders in hand. Semi data show that the global semiconductor equipment market scale in 2021 was 102.64 billion US dollars, a year-on-year increase of + 44.1%. It is expected that the market scale in 2022 is expected to reach 114 billion US dollars. Affected by the epidemic and other factors, the downstream demand side is under pressure, and investors are worried about the prospects of the industry. However, the pace of expansion of wafer factories has not slowed down, and the demand for upstream equipment continues to rise. TSMC recently said that it would maintain the capital expenditure of US $40-44 billion estimated at the beginning of the year; In 2022, China’s Semiconductor Manufacturing International Corporation(688981) , Huahong, China Resources Microelectronics Limited(688396) and other production lines will also be completed or climbing. In the logic field, the mainstream chip production line purchases the company’s equipment in batches; In the storage field, the company has also entered the production line verification, and the power devices have in-depth cooperation with Chinese manufacturers. In 2022q1, the company’s inventory was 9.712 billion yuan, an increase of 1.678 billion over the beginning of the year, a month on month increase of + 20.88% and a year-on-year increase of + 63.5%; Contract liabilities totaled 5.090 billion yuan, a month on month increase of + 0.88% and a year-on-year increase of + 13.27%.
The fixed growth project is progressing smoothly, with continuous R & D investment and sufficient growth momentum. In November 2021, the company’s fixed increase project of RMB 8.5 billion was successfully implemented, and was supported by the national large fund (phase II), with a subscription of RMB 1.5 billion. The fixed increase price of the company is 304 yuan, and there is still room for improvement compared with the current share price. The company will invest 3.8 billion yuan to expand the production of semiconductor equipment and increase the production capacity of 500 integrated circuit equipment, 500 emerging semiconductor equipment, 300 LED equipment and 700 photovoltaic equipment. The construction period is two years. It is expected to bring an average annual income growth of 7.46 billion yuan to the company after reaching the production capacity. It is planned to invest 3.1 billion yuan to further develop high-end equipment, break through the core process equipment of advanced process, realize the localization of 28-14nm key equipment and 7Nm process equipment, and break the overseas monopoly. In addition, the company has invested 800 million yuan to expand the production of high-precision electronic components, which is expected to be completed in 2023, with an average annual new income of 440 million yuan. In terms of R & D, the company invested 2.892 billion yuan in R & D in 2021, a year-on-year increase of + 79.85%, accounting for 29.87% of revenue. The expenditure included in R & D expenses was 1.297 billion yuan, with a year-on-year increase of + 93.42%. The company has a forward-looking layout in terms of existing capacity expansion and future technology development, with sufficient growth momentum.
Investment suggestion: the company has a solid leading position in China’s semiconductor equipment industry and continues to benefit from the high demand increase brought by downstream expansion and domestic substitution. The equipment industry is an industry driven by R & D and harvested in the later stage. It is also a link that must be broken through in the localization process. We are optimistic about the further improvement of the company’s semiconductor equipment business scale and profitability. It is estimated that from 2022 to 2024, the operating revenue of the company will be RMB 138.83/189.67/24.197 billion respectively, with a year-on-year increase of 43.36% / 36.62% / 27.57%, and the PS corresponding to the current stock price will be 9.03/6.61/5.18 respectively. The company’s first purchase price is 316 yuan, and PS is given a corresponding rating of “2022”.
Risk tip: the boom of the semiconductor industry is at risk of entering the downward cycle; The R & D of high-end equipment is less than expected; The epidemic continues or repeatedly affects the construction progress of the wafer factory; China’s equipment procurement is expected to decline due to the intensification of US sanctions.
