\u3000\u3 Shengda Resources Co.Ltd(000603) 690 Pnc Process Systems Co.Ltd(603690) )
Event: the company released the annual report of 2021, and in 2021, the company achieved a revenue of 2.084 billion yuan (+ 49.18% YoY); The net profit attributable to the parent company was 282 million yuan (+ 8.12% YoY); The net profit attributable to the parent company after non deduction was 162 million yuan (+ 46.57% YoY).
The company released the first quarterly report of 2022. In 2022q1, the company achieved a revenue of 548 million yuan (+ 136.98% YoY); The net profit attributable to the parent company was 22 million yuan (- 70.78% YoY); The net profit attributable to the parent company after non deduction was 39 million yuan (113087% YoY).
Event comments:
The pan semiconductor segment business drives high revenue growth in 2021 and 2022q1. In 2021, the company achieved an operating revenue of 2.084 billion yuan, mainly due to the revenue contribution of the company’s Pan semiconductor business growth, including semiconductor process equipment business, process support equipment business and high-purity process system service business. Among them, the operating revenue of high-purity process integration system is 1.078 billion yuan (+ 24.86% YoY; the revenue accounts for 51.72%); The operating revenue of semiconductor equipment is 701 million yuan (+ 222.06% YoY; the revenue accounts for 33.64%); The operating revenue of optical sensors and optical devices is 303 million yuan (- 3.72% YoY; the revenue accounts for 14.54%). In 2022q1, the company realized a revenue of 548 million yuan and a net profit attributable to the parent company of 22 million yuan, a year-on-year decrease of 70.78%, mainly due to the government subsidy of 68.646 million yuan received in 2021q1. In the reporting period, the income was only 645600 yuan, and the net profit attributable to the parent company after deduction was 39 million yuan, a year-on-year increase of 113087%.
Semiconductor equipment began to make efforts, and the industry maintained a high outlook. 1) The semiconductor equipment business sector began to make efforts, continued to get repeated orders from existing users, and continued to develop new users. The company began to lay out the research and development of wet equipment in 2015, and began to get orders of 100 million yuan in 2018. The orders exceeded 200 million yuan in 2019 and 500 million yuan in 2020. In 2021, the company received repeated orders from 13 users and opened up 10 new users, all of which are major wafer manufacturers in the industry. The annual orders for wet equipment reached 1.12 billion yuan, a year-on-year increase of 111.32%. In 2021, the company produced more than 97 single-chip wet equipment and trough wet equipment in the whole year. Meanwhile, the new orders for 12 inch wet equipment exceeded 600 million yuan, of which the new orders for monolithic wet equipment exceeded 380 million yuan. The company’s wet process equipment has obtained equipment orders for the whole line on several mature production lines, effectively replacing the previous two Japanese manufacturers; The company also received orders for wet equipment of the whole line on the gallium nitride and silicon carbide production lines; The company obtains equipment orders for all processes at the 28nm node of the advanced manufacturing process; In the process below 14 nm, orders for four wet equipment were also obtained. 2) According to icinsights data, the capital expenditure of the global semiconductor industry is expected to reach a record high of US $190.4 billion in 2022, with a year-on-year increase of 24%. According to Gartner statistics, in 2020, the global semiconductor cleaning equipment market was US $2.539 billion. In 2021, with the recovery of the global semiconductor industry, the global semiconductor cleaning equipment market will show an increasing trend year by year. It is expected that the global semiconductor cleaning equipment industry will reach US $3.193 billion in 2024. Relying on the high prosperity of the industry and the demand for localization substitution, in 2022, the company’s new order target is more than 4 billion yuan, of which the new order target of wet equipment is more than 2 billion yuan, and it is estimated that single-chip equipment will account for 60% of the new orders.
The high-purity process system maintained continuous growth and supported the increase in the proportion of equipment. 1) The business segment of high-purity process system has maintained continuous growth, in which the domestic substitution of gas and chemical support equipment business is progressing smoothly. The R & D of a number of core equipment and related control software of high-purity process system has been successfully completed, and the outsourcing has been replaced by using self-made equipment and software. The company’s process level has been able to achieve ppb (one billionth) impurity control, become the recognized brand of mainstream IC manufacturing users, and the shipment volume has increased sharply. In 2021, the main customers were first-line IC manufacturing enterprises in the industry, such as SMIC, Huahong, Changxin, Hangzhou Silan Microelectronics Co.Ltd(600460) etc., and the number of annual orders reached a new high. With the successful completion of the production expansion plan to support equipment capacity, the company has an industry competitive advantage in this business segment, and will obtain more orders from downstream customers in the future to maintain a stable growth trend. 2) High purity process gas and chemical support equipment, as a supporting equipment connected with the process cavity of oxidation / diffusion, etching, ion implantation, deposition, grinding, cleaning and other process machines as a working system, is a necessary equipment closely related to the process yield, which is equivalent to the cardiovascular system of a factory. With the development of import substitution, such equipment accounts for an increasing proportion in high-purity process systems, and the derived demand for supporting design, installation, testing and commissioning services is also growing. Such services continue to exist in the whole life cycle of semiconductor manufacturing enterprises. The company has become a leading supplier of such equipment in China (including high-purity special gas equipment, high-purity chemical supply equipment, grinding fluid supply equipment, precursor supply equipment, process tail gas liquid treatment equipment, dry process machine gas supply module, etc.), with more than 5000 sets of equipment delivered every year.
The R & D intensity has increased year by year, reaching 14.50% in 2021. Since 2017, the company’s R & D intensity (R & D investment / operating revenue) has increased year by year, with 7.44%, 10.76% and 14.50% respectively from 2019 to 2021. In 2021, the R & D investment of the company was 302 million yuan (including 144 million yuan of expense and 158 million yuan of capital), with a year-on-year increase of 101.06%. The company is a local supplier that can provide all wet processes to the nodes of the 28nm process in China. Single chip and trough wet equipment have been recognized by customers. The company’s 12 inch single chip wet cleaning equipment and trough wet equipment will effectively represent local brands to participate in the competition in the high-end cleaning equipment market outside Chinese Mainland and Chinese Mainland. In 2021, the company delivered the first batch of single chip wet equipment and successfully passed the verification of multiple processes. At the same time, the plan for convertible corporate bonds is issued, and the total amount of convertible bonds to be issued is no more than RMB 1.1 billion, which is used for monolithic wet process module, core parts R & D project, to Chunbei Semiconductor R & D and production center project, semiconductor equipment module and component manufacturing project, etc. At present, the plan is being actively promoted to provide financial support for the rapid development of the company’s business and the realization of its business strategy. Through active R & D investment and business layout, ensure the company’s long-term competitiveness and flexible and controllable supply links.
Investment suggestions:
We expect the net profit of the company from 2022 to 2024 to be RMB 399 / 508 / 607 million respectively, EPS to be RMB 1.25/1.59/1.91/share respectively, and the corresponding P / E of the current stock price to be 25 / 20 / 16 times respectively. Considering that the pan semiconductor industry in which the company is located is in a high business cycle, and the Chinese process equipment is in the golden window period of domestic substitution, the company’s equipment R & D continues to make technological breakthroughs and orders grow rapidly, we raised its “overweight” rating to “buy”.
Risk tips:
The risk of intensified industry competition; Withdrawal of accounts receivable risk; Downstream demand slowdown risk.
