Key points of investment
Next Monday (April 3), “Qizhong Technology”, a company listed on the Science and Technology Innovation Board, will ask for a quote.
Qizhong Technology (688352): The company is a high-end advanced package testing service provider for integrated circuits, providing customers with a full range of integrated circuit sealing and testing services, covering various types of products such as display driver chips, power management chips, and RF front-end chips. The company achieved operating income of 869 million yuan/1,320 million yuan/1,317 million yuan respectively in 2020 and 2022, YOY was 29.80%/52.00%/-0.25% in that order, and the three-year compound annual revenue growth rate was 18.45%; achieved net profit of 55 million yuan/305 million yuan/303 million yuan, YOY was 32.92%/455.15%/-0.49% in that order, and the three-year compound annual growth rate of Fumo's net profit was 64.59%. According to preliminary forecasts, net profit of the mother is expected to reach 9 million yuan to 14 million yuan in January-January 2023, a change of -88.36% to -81.89% over the same period last year.
Investment highlights: 1. The actual controller of the company is the Hefei State-owned Assets Administration Commission. As of the date the prospectus was signed, the Hefei Municipal State-owned Assets Administration Commission was able to determine more than 50% of the company's stock voting rights and the majority of directors' voting rights through Hefei Qizhong Holdings and Xinping Fund. In recent years, Hefei has vigorously promoted the development of the integrated circuit industry. It has now initially completed the layout of the entire integrated circuit industry chain and has become one of the few cities in the country with a full integrated circuit design, manufacturing, package testing and equipment materials industry chain. In 2021, Hefei achieved an output value of nearly 40 billion yuan of the entire chip industry chain, an increase of about 30% over the previous year. 2. The company focuses on the field of display driver chip sealing and testing, and is the largest full-process display driver chip sealing and testing enterprise in China. The company is one of the earliest enterprises in China to implement full-process sealing and testing services for display driver chips. It has strong strength in major processes such as convex block manufacturing, wafer testing, and glass-clad packaging of display driver chips, and currently has the most advanced mass production and sealing capabilities for 28nm process display driver chips in the industry. According to data estimates from Cidy Consultants and Sullivan, in 2019-2021, the company was the domestic display driver chip packaging and testing company with the highest revenue and largest shipment volume, ranking third in the world in this field. 3. Relying on technical advantages in convex block manufacturing, the company achieved good results in developing the packaging and testing business of non-display chips during the reporting period. Since its establishment, the company has focused on technology research and development for convex block manufacturing. It is one of the few domestic sealing and testing manufacturers that also has large-scale mass production technology for gold convex blocks, copper-nickel-gold bumps, copper column bumps and tin bumps. Relying on the convex block manufacturing process, the company's non-display chip sealing and testing business revenue grew rapidly during the reporting period. The non-display chip sealing and testing revenue from the convex block manufacturing process in 2019-2021 was 12.35 million yuan, 34.06 million yuan, and 81.86 million yuan respectively, accounting for more than 80% of non-display chip sealing and testing revenue.
In the future, the company will focus on the research and development of various metal convex block technologies for 12-inch wafers and develop convex block manufacturing and sealing services based on second-generation and third-generation semiconductor materials to further realize the introduction and mass production of advanced sealing and testing services for non-display chips such as power management chips, RF front-end chips, MCUs, and MEMS.
Comparison with listed companies in the same industry: Tongfu Microelectronics, Qipai Technology, Huicheng Co., Ltd., and Jingfang Technology were selected as comparable listed companies of Qizhong Technology based on comprehensive considerations such as the company's packaging type and chip types, but we tend to think that Huicheng Co., Ltd., which also focuses on the field of display driver chip packaging and testing, is highly comparable to the company. Looking at the comparable companies mentioned above, the average revenue (TTM) scale of the industry is 5.654 billion yuan, the comparable PE-TTM (excluding negative values/arithmetic average) is 48.94X, and the gross sales margin is 26.79%. In comparison, the company's revenue scale is lower than the industry average, but the gross sales margin is higher than the industry average.
Risk warning: There is still a possibility that companies that have begun the inquiry process will not be able to go public due to special reasons; company content is mainly based on the content of prospectus and other public information; there is a risk that the selection of listed companies in the same industry is not accurate enough; there may be interpretation deviations in the selection of content data. The specific risks of listed companies are shown in the text.