Founded in 2005, shengmei Shanghai focuses on the research and development of semiconductor cleaning equipment. The company has made a breakthrough in the field of wet cleaning, and has emerged in electroplating and copper throwing equipment. The company’s revenue has increased rapidly in recent three years, from 254 million yuan in 2017 to 1.007 billion yuan in 2020, with a compound annual growth rate of 58%. With advanced self-developed products, the company has established close cooperative relations with a large number of international well-known enterprises. Huahong group, Changjiang storage, SK Hynix, Changxin storage and other enterprises are long-term partners of the company. Since 2021, the company has obtained orders with many new overseas customers.
Domestic cleaning equipment has a wide alternative space. The Chinese mainland semiconductor industry has entered the golden development stage. As a link that is easier to achieve domestically, cleaning equipment will usher in a good opportunity. In 2020, the market scale of local cleaning equipment was USD 936 million, and the CAGR from 2016 to 2020 was as high as 30.47%, showing a rapid development momentum. In the short term, the expansion of China’s wafer fabs is not reduced. 8 of the 29 newly built 29 wafer plants in Chinese mainland Chinese mainland are strongly driving the demand for cleaning equipment. In the medium and long term, under the background of technological upgrading, with the increase of chip manufacturing process and complex structure, the demand and technical difficulty of semiconductor cleaning will increase significantly, and the demand for cleaning equipment is expected to rise both in quantity and price. From the competition pattern, the global cleaning equipment market is dominated by overseas leading companies such as DNS, TEL, Lam. In 2019, the total market share of three companies was close to 90% (by sales). Sheng Mei had achieved the domestic substitution breakthrough in the mainland. The bid winning ratio (20.5%) in 2019 was 20.5% only to the Chinese mainland. The market share of the company’s semiconductor cleaning equipment is expected to continue to increase and has the potential for sustainable growth.
The company’s differentiated technical route has been recognized by the market, and the domestic penetration rate has gradually increased. Saps technology and functional water ensure the uniformity of megasonic cleaning; Tebo technology ensures non-destructive cleaning by effectively utilizing cavitation effect; Tahoe combined cleaning takes into account both effect and efficiency. At present, the company’s cleaning equipment has been recognized by many mainstream semiconductor enterprises at home and abroad, and has established a stable cooperative relationship. Good reputation has helped the company’s equipment usher in a large volume. In addition, shengmei has long accumulated technology in copper plating, copper throwing, vertical furnace and other fields, and has launched many excellent equipment products such as ultraecp map. It is estimated that at present, shengmei’s products can cover a total market of about US $5 billion, including cleaning, copper plating and furnace tubes. The company will continue to develop two new front-end equipment to increase the product coverage market from the existing US $5 billion to US $10 billion, while the company’s revenue in 2020 is only RMB 1.007 billion, which has considerable room for improvement. According to the international bidding network, the proportion of the company’s cleaning equipment winning the bid in the Yangtze River storage, Huali and Huahong Wuxi production lines shows an upward trend year by year.
The marketing strategy has been successful and the customer globalization strategy has been implemented. Since October 2021, the company has successively received orders from international front-line customers, including demo orders for saps equipment from a major global semiconductor manufacturer. It is expected to be assembled in China in the first quarter of 2022; The demo order of ultra ecpmap copper plating equipment from a mainstream semiconductor manufacturer in Asia is expected to be delivered in early 2022; Two orders for ultracpr wet degumming equipment from a leading IDM chip manufacturer in the world. The success of the company’s overseas market promotion strategy lies in that the original differentiation technology is first verified at several key clients in Asia, and then promoted to world-class manufacturers.
The company actually raised 3.69 billion yuan in this public offering of new shares, and the raised funds were used for shengmei Shanghai equipment R & D and manufacturing center and shengmei Shanghai high-end semiconductor equipment R & D project, so as to quickly realize the integrated development and production of trough cleaning equipment, vertical furnace tube equipment (annealing furnace, oxidation furnace, LPCVD, ALD) and other related process equipment, Expand and establish a full range of product lines with both wet and dry process equipment.
Huatai Securities Co.Ltd(601688) said that shengmei Shanghai is the leader of semiconductor cleaning equipment in China. It is optimistic about the company’s core competitiveness of “platform, differentiation and globalization”. It is predicted that the revenue from 2021 to 2023 will be 1.56 billion yuan, 2.739 billion yuan and 3.987 billion yuan. It is given a “buy” rating for the first time. Considering the company’s leading position, it is 20.8 times the industry consensus expected average, Based on 2022ps, a valuation premium of 21.6% is given, corresponding to the target price of 160 yuan / share.
