The company is the leader of LED solid crystal machine, leading the industry in the field of Mini LED solid crystal machine, and is expected to benefit from the performance elasticity brought by the outbreak of Mini in the short term to achieve a new round of high-speed growth; the company expands the layout of pan-semiconductor packaging equipment through endogenous epitaxy, benefiting from the domestic substitution trend for a long time. In addition, the company's supercapacitors gradually infiltrated, research and development of lithium equipment benefit from the growth of the industry. We have long been optimistic about the company's competitive advantage in the field of solid crystal machines and its platform layout in the field of semiconductor packaging equipment, covering it for the first time and giving it a "buy" rating.
Company profile: LED solid crystal machine leader, a great increase in performance in 2021. Founded in 2006, the company started with capacitor testing equipment, then launched LED solid crystal machine, upgraded Mini LED solid crystal machine, and gradually expanded semiconductor packaging, lithium battery equipment and other products, with revenue of 1.197 billion yuan in 2021, compared with 19.63% CAGR in the past three years. In terms of revenue share, the proportion of LED solid crystal machine / semiconductor solid crystal machine / capacitor aging testing equipment / lithium battery equipment / accessories in 2021 was 57.99% / 17.96%, 17.39% and 2.59%, respectively.
The company's LED equipment has successfully supplied national star optoelectronics, Sanan optoelectronics, Zhaochi shares, Hongli Zhihui and other domestic well-known customers, and maintained friendly cooperation with overseas manufacturers such as Samsung and billion optoelectronics; capacitor equipment customers cover well-known customers such as Aihua Group and Jianghai shares; in the field of semiconductors, it maintains good cooperation with well-known companies such as Crystal Guide Micro, Canrui Technology, Yangjie Technology and so on. In the future, we believe that the company will benefit from the performance flexibility brought by the outbreak of Mini in the short term and start a new round of growth; through endogenous epitaxial expansion of pan-semiconductor packaging equipment, the company will benefit from the trend of domestic substitution in the long run, and we expect the company's revenue CAGR to be 20% in the next three years.
Solid crystal machine main business: LED solid crystal machine ushered in a performance inflection point, the layout of semiconductors open more room for growth. The company's main solid crystal machine is mainly used in LED/IC/ discrete devices and other fields, used in the fixed crystal link of chip packaging, the company is the number one solid crystal machine manufacturer in the domestic market, accounting for 6% of the global solid crystal machine market, second only to ASMPT and BESI. On the whole, we believe that the company has a solid leading position in the solid crystal machine field, and is expected to benefit from the growth of the Mini industry and the trend of domestic substitution of semiconductors by virtue of its own advantages. Revenue CAGR is expected to be 22.10% in the next three years.
1) LED solid crystal machine: the company's market share of global / domestic LED solid crystal machine is about 29% and 70% respectively, with more than 90% of domestic customers, stable market position and stable contribution to performance. Mini LED entered the first year of commercial use in 2021, and accelerated penetration since 2022, giving priority to equipment benefits under the increase in industry capital expenditure. We estimate that the market size of Mini LED solid crystal machine in 2025 is about 3.405 billion yuan, and that in 2021-2025 CAGR is 40.23%. It is estimated that the market size of Mini LED backlight / direct display solid crystal machine in 2025 is 2,654,751 million yuan respectively. The company has successively launched triad / hexagonal solid crystal machines encapsulating Mini LED, with a yield of 99.999%, leading the industry, and is expected to bring great performance flexibility in the short and medium term.
2) Semiconductor solid-crystal machines: Yole predicts that the global market for semiconductor solid-crystal machines will reach US $1.083 billion in 2024, and the CAGR will be 7.42% in 2018-2024. At present, the market is mainly monopolized by large foreign companies, and the overall localization rate of closed test equipment is less than 5%. The company's semiconductor solid crystal machine revenue increased from 9 million yuan in 2017 to 215 million yuan in 2021. Under the trend of expanding production in mainland wafer factories, it is expected to drive the demand for downstream equipment in the future. We estimate that the company's revenue from this business will be 40.90% CAGR in the next three years.
3) Wire soldering machine: the global / domestic market size of wire welding machine is about US $16.4 billion in 2018, of which the domestic LED wire machine CR3 is 82% and the semiconductor wire machine CR3 is 98%. The market concentration is high, but the localization rate is less than 1%. In 2021, the company acquired Kaijiu layout welding machine to create a complete closed test product matrix of "solid crystal + welding wire + test packaging", giving full play to its collaborative advantages to enhance the added value. We expect Kaijiu revenue to grow further in the future.
Outside the solid crystal machine: supercapacitors gradually infiltrate, and the research and development of lithium devices benefit from the growth of the industry. 1) Capacitor aging testing equipment: for the company's start-up business, the current leading position in the industry is stable, and the company is expected to maintain a stable market share. It is estimated that the capacitor business revenue CAGR will be 11.64% in the next three years, while the proportion of supercapacitor testing equipment is expected to increase, and the gross profit margin is expected to remain 25% +. 2) Lithium battery equipment: the company has cut into the lithium battery equipment market with winding machines, and has supplied Luhua Group, and is expected to expand its category to achieve high growth in the future. we expect the sector's revenue CAGR to be 21.64% in the next three years.
Risk factors: downstream demand is lower than expected; new product research and development and market expansion are not as expected; industry competition is intensified; prices of high-end core components are rising or out of stock; core technical personnel are lost, and so on.
Investment advice: the company is the leader of LED solid crystal machine, Mini LED solid crystal equipment yield and customer expansion of the leading industry, is expected to benefit from the performance elasticity brought about by the outbreak of Mini in the short term, to achieve a new round of high-speed growth; and through endogenous epitaxial expansion of pan-semiconductor packaging equipment, long-term benefit from domestic substitution trend. We forecast that the annual net profit of the company in 2022-23-24 is 3500.438 million yuan respectively, and the corresponding EPS is 2.773.430.29 yuan respectively. We select A-share companies with pan-semiconductor equipment (LED equipment, semiconductor equipment, photovoltaic equipment, lithium equipment, etc.) as the main products, including North Huachuang, China Micro, Huafeng Measurement and Control, Leader Intelligence, Jiejia Weichuang, Maiwei shares, Dongwei Technology, Jingsheng Mechatronics and so on as comparable companies.
Combining the two valuation methods of PE and PS, combined with the comparable company valuation and the company's historical valuation, we give the target price 119RMB according to the PE,8.5 times PS of 43 times in 2022, and cover the "buy" for the first time.
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