I. Incident Overview
On August 19, the company released its 2021 mid-year report. 2021H1 achieved revenue of 440 million yuan, an increase of 45.8% over the same period.
II. Analysis and Judgment
Increased revenue from semiconductor ultrapure chemicals led to a sharp increase in performance
In the first half of 2021, the company achieved revenue of 440 million yuan, an increase of 45.8%, a net profit of 110 million yuan, an increase of 317%, after deducting net profit of 45 million yuan, an increase of 76.4%. Among them, 21Q2 achieved revenue of 230 million yuan in a single quarter, an increase of 33.4%, an increase of 12.1%, and a net profit of 105 million yuan, a year-on-year increase of 56.5%; mainly due to a sharp increase in operating income of ultrapure chemical products such as electroplating solutions and cleaning fluids used in wafer manufacturing. Non-recurring profit and loss during the reporting period was 63 million yuan, mainly income from changes in fair value generated by SMIC shares held indirectly by the company.
Structural optimization and increased profit margins led to an increase in overall gross margin
Benefiting from the optimization of the product structure and the increase in gross margin of the electronic chemical-related business, the company's overall gross margin increased by 1.9 pct to 36.5% in the first half of the year. Among them, 1) the electronic chemical materials business achieved revenue of 170 million yuan, an increase of 48% over the previous year, and gross margin increased by 2.8 pct to 49.8%; 2) The electronic chemical materials supporting equipment business achieved revenue of 45 million yuan, an increase of 95% over the previous year, and gross margin increased 7.2 pct to 45%; 3) The fluorocarbon coatings business achieved revenue of 2.0 billion yuan, an increase of 37% over the previous year, and a decrease in gross margin 2.6 pct to 24%.
Major breakthroughs have been achieved in photoresists and silicon nitride etching solutions
The company's self-developed KrF photoresist products have passed customer certification and successfully obtained orders, making a major breakthrough.
The company's original national science and technology product, the silicon nitride etching solution for memory chips, has already received batch orders. It has received orders of more than 30 million yuan and achieved sales of more than 13.5 million yuan, breaking the situation where this product has always been monopolized by foreign companies. The next generation of products developed in cooperation with customers has also entered the batch testing stage. In the current context of tight supply and demand and accelerated domestic substitution, with strong R&D strength and technology accumulation, the company continues to make breakthroughs in electroplating, cleaning, photoresist, and etching fluids on the key circuit of card semiconductor materials, which is expected to usher in a high performance increase.
III. Investment Suggestions
We expect the company's net profit attributable to the parent in 2021/22/23 to be 171/161/223 million, corresponding to PE 93/99/72 times. Excluding the impact of profit and loss from changes in the fair value of transactional financial assets, the company's net profit after deducting non-attributable financial assets is estimated to be $16/161/223 million, an increase of 147%/39%/39% over the previous year. Referring to the current 92-fold PE of Shenwan Semiconductor, considering that the company is one of the leading semiconductor materials companies in China, new product expansion continues to break through, maintaining the “recommended” rating.
4. Risk Reminder:
Industry sentiment fell short of expectations, R&D progress fell short of expectations, and production capacity climbed short of expectations.
