\u3000\u3000 Kunshan Kinglai Hygienic Materials Co.Ltd(300260) (300260)
Event:
The company issued the announcement on the advance increase of annual performance in 2021. It is estimated that the net profit attributable to the parent company in 2021 will be 166 million yuan to 185 million yuan, with a year-on-year increase of 101.05% to 124.06%; It is estimated that the net profit deducted from non parent company is 156 million yuan to 175 million yuan, with a year-on-year increase of 120.95% to 147.86%.
Benefiting from the high prosperity of semiconductors and domestic substitution, Q4 performance continued to grow high: the company’s annual net profit attributable to the parent company increased significantly year-on-year, mainly due to: (1) benefiting from the trend of semiconductor localization, the company’s semiconductor sector business grew rapidly. (2) Benefiting from the rapid expansion of Chinese vaccine and pharmaceutical manufacturers, the company’s biomedical business grew rapidly. From the single quarter of Q4, the net profit attributable to the parent company is expected to be 45 million yuan to 64 million yuan, with a year-on-year increase of 125.00% to 220.00% and a month on month increase of – 15.09% to 20.75%. The net profit deducted from non parent company was 44 million yuan to 63 million yuan, with a year-on-year increase of 158.82% to 270.59% and a month-on-month increase of – 10.20% to 28.57%. Under the trend of high prospect of semiconductor and domestic substitution, Q4 performance continued the high growth trend.
Semiconductor high-purity clean materials have a wide space, and the company continues to benefit from domestic substitution: the company mainly provides high-purity clean materials for semiconductors, including high-purity clean pipes, valves, cavities, etc. the products are mainly used in equipment and factory affairs, including vacuum system and gas transmission control system. According to the survey summary of the company’s investors, the use of the company’s semiconductor products accounts for about 3% – 5% of the total investment of the chip factory, about 5% – 10% of the purchase amount of raw materials of the semiconductor equipment factory, and the market space exceeds 50 billion yuan. The technical barrier of semiconductor high-purity clean materials is high, in which the gas products used in semiconductor manufacturing process need strong corrosivity, and the surface corrosion-resistant electrolytic polishing (EP) treatment of products is very high; Semiconductor vacuum products should meet the requirements of ultra-high vacuum 10-9pa, and the corresponding products have high welding technical requirements. At present, the vast majority of the market is occupied by foreign enterprises such as Europe, America, Japan and South Korea. The company has more than 10 years of OEM experience of international semiconductor ultra-high purity application material manufacturers, electrolytic polishing and welding technology have passed the application material certification. For a long time, it has supplied high-purity pipes and valves for international first-line equipment factories Lam and Amat, and has successively opened up customers such as Naura Technology Group Co.Ltd(002371) , Changjiang storage and Hefei Changxin, In the future, it is expected to fully benefit from the demand growth brought by domestic substitution in the semiconductor market.
Leading companies are optimistic about the continuation of the high prosperity of the industry and the prospect of domestic substitution of upstream equipment: TSMC said at the latest performance briefing that it expects the semiconductor market (excluding memory) to grow by 9% and the chip OEM industry to grow by 20% in 2022. It is expected that the production capacity will remain tight throughout 2022, and the capital expenditure this year is expected to be between us $40 billion and US $44 billion, Year on year growth of 33% to 47%. TSMC’s capital expenditure has increased rapidly for many years, which is expected to drive the growth of upstream equipment demand. From the Chinese mainland Chinese market, with the continuous transfer of global wafer production capacity to mainland China, according to ICInsights data, the Chinese mainland’s wafer production capacity is expected to increase from 15.3% in 2020 to 18% in 2025. At present, the localization rate of upstream equipment is at a low level. With the continuous improvement of the proportion of wafer production capacity in the mainland and the superposition of domestic substitution demand, it is expected to drive the growth of upstream equipment demand.
There is huge room for domestic substitution of aseptic packaging, and the coordinated progress of equipment and packaging materials helps the rapid development of the company: the scale of the global aseptic packaging market continues to grow steadily. According to the prediction of markets and markets, the aseptic packaging market is expected to grow from US $39.62 billion in 2017 to US $66.45 billion in 2022, with a CAGR of 10.89%, of which the Asia Pacific region will become the fastest growing market. At present, most of the global aseptic packaging market is occupied by Tetra Pak and SIG, and the market share of Chinese manufacturers is very small. The company previously provided filling machine OEM for Tetra Pak for a long time, and entered the packaging material industry through the acquisition of Shandong Bihai. According to the summary of investor research, at present, Shandong Bihai has entered the supply chain of first-class enterprises at home and abroad, including customers such as Sanyuan, Wandashan, Master Kang, Nestle and maixier. It is expected to gradually open the domestic alternative market and further expand the market share by virtue of its technical advantages and the turnkey solution of “sterile packaging materials + filling machine equipment + Design Engineering”.
Investment suggestion: we estimate that the company’s revenue from 2021 to 2023 will be 2.053 billion yuan, 2.811 billion yuan and 3.547 billion yuan respectively, and the net profit attributable to the parent company will be 175 million yuan, 310 million yuan and 419 million yuan respectively, maintaining the “Buy-A” investment rating.
Risk warning: the risk that the market demand is less than expected; Risk that customer expansion is less than expected; The risk that the progress of domestic substitution is less than expected; Risk of rising raw materials; Risk that the progress of raised investment projects is less than expected; Risk of shareholder reduction.
