2021-10-19 Zhang Xin of Zhongtai Securities Co., Ltd. conducted research on China Microelectronics and released the research report "IDM veteran, upgrading of domestic alternative stack products brings growth". This report gives an overweight rating on China Microelectronics, and the current share price is 8.58 yuan.
Huawei Electronics (600360)
Summary of the report
Veteran power semiconductor IDM manufacturers, performance to meet the high-speed development. Huawei Electronics, formerly known as Jilin Semiconductor Factory, founded in 1965, is the first batch of professional semiconductor manufacturers in China. At present, the company has established from high-end diodes, one-and-two-way thyristor, MOS series products to the sixth generation IGBT, SIC, etc., forming a relatively complete and comprehensive competitive power semiconductor device product system in China. Review of the company's revenue from 1.39 billion in 2016 to 1.72 billion in 2020. The compound growth rate was 5.3%, which was mainly affected by the epidemic and limited demand and production capacity, while the net profit of homing decreased from 41 million in 2016 to 34 million in 2020, mainly due to a sharp increase in the company's R & D investment, financial expenses and management expenses. According to the company's announcement, H1 had revenue of 992 million in 2021, an increase of 23% over the same period last year, and its net profit was 27 million, an increase of 43.6% over the same period last year, mainly due to the profit improvement effect brought about by capacity utilization and product upgrading brought about by power supply falling short of demand.
The domestic market of power semiconductors is about 100 billion, and domestic substitution brings growth. According to the forecast of IHSMarkit, China has become the largest consumer of power semiconductor devices in the world. The market demand accounts for more than 35% of the global demand in 2018, and the market size is expected to reach US $15.9 billion in 2021. The compound growth rate of the domestic IGBT market in the middle and lower reaches from 2018 to 2025 is 19.96%. The compound growth rate of MOS2018-2021 is 10%. While the opportunities for domestic power semiconductors benefit from the rise in volume and price brought about by short-term supply and demand, and the growth brought about by domestic substitution in the middle production period, especially from the perspective of the competition pattern, the domestic market share of IGBT is less than 20% in 2019 and 15% in 2019, while the domestic market share of MOS in 2018 is only 0.5%.
Huawei Electronics: domestic alternative superimposed product structure continues to upgrade to bring profit shift. After more than 50 years of continuous accumulation and growth, the growth focus of the company is mainly in: (1) benefiting customers to promote the trend of domestic substitution: the company covers more than a dozen areas, such as new energy vehicles, white goods, household lighting, industrial power, etc., following the continuous promotion of leading customer protection needs of international first-tier brands, such as Vision Source shares, Konka, Panasonic, LG, Opu Lighting, etc. (2) Product upgrade: the previous products are mainly focused on diodes, low-voltage MOS, etc., according to the company's R & D and planning, the company will increase the profitability improvement in the fifth-generation IGBT, IPM, middle and high-end MOS platforms and other mid-to-high-end product structure. (3) capacity layout: the company has invested 10.2 billion yuan to build a semiconductor industrial park in Jilin City to carry out technical research and development and capacity expansion in many areas of power semiconductors, opening up long-term space.
Investment suggestion: we predict that the company's operating income from 2021 to 2022 will be 21.25yuan and 2.652 billion yuan respectively, and its net profit will be 0.76 yuan and 105 million yuan respectively, an increase of 124% and 38% respectively over the same period last year, corresponding to the PE of 108,78 in 2021-2022. Considering the layout of the company as the veteran IDM leader, IGBT, IPM, MOSFET and other products will be gradually upgraded, while taking into account the robustness of performance and the persistence of domestic substitution, covering for the first time. Give "overweight" rating.
Risk hints: domestic substitution is lower than expected; capacity release and gross profit margin increase are lower than expected; industry space measurement deviation risk; research and reporting information update is not timely risk.
