Incident: Recently, the company issued an announcement confirming that it was the winning bidder for Fujian Jinhua Integrated Circuit Co., Ltd.'s memory production line construction project package A (phase I). The winning bid amount was 446.69 million yuan. It is expected that winning the bid for this project will have a positive impact on the company's business performance.
Comment: Domestic semiconductors and panels are on the cutting edge of the industry, and strong downstream demand is driving high prosperity in clean room projects. According to the forecast of the China Electronics Society, by 2020, the market size of China's cleanroom engineering industry will increase from 76.755 billion yuan in 2015 to 141,233 billion yuan, with a compound annual growth rate of around 12.97%. The continuous expansion of the market size of the industry has provided huge development opportunities and broad market prospects for leading enterprises in the industry. Upfront investment in cleanroom engineering as the semiconductor and panel industry will maintain a high level of prosperity, and leading companies will benefit first.
Taiwan's semiconductor and panel production capacity has been transferred to the mainland, and Taiwan's Yaxiang has a clear advantage. In recent years, there has been a clear trend of Taiwan's semiconductor and panel production capacity shifting to the mainland. As one of the two Taiwanese system integrators (the other is Hantang, Jiangxi), the company had an earlier layout, is deeply rooted in the country, and has obvious undertaker advantages. It is the preferred enterprise for clean room projects.
The clean room industry has high barriers, and downstream customer requirements are extremely strict. IC semiconductor and optoelectronic product manufacturers usually invest up to several billion dollars to build factories at one time. Their production conditions are very strict. Any small defect affects the yield of chips and panels, and the stability requirements for clean rooms are very high. By the end of June 2017, the company had completed 27 semiconductor industry projects and 43 panel enterprise projects, evolving from a cleanroom builder to a dust-free environment builder. Its many historical achievements in the past were highly recognized by dozens of well-known customers such as Hejian Technology and Youda Optoelectronics, increasing the possibility of receiving subsequent orders.
Recently, orders in the semiconductor field have continued, which is in line with the characteristics of the industry. According to reports, the semiconductor “Big Fund” is preparing to launch the second phase. It is expected that the scale will exceed the first phase (actual placement of 138.7 billion). The launch of the second phase of the “Big Fund” will further accelerate industrial investment and development, and the company will also greatly benefit.
Investment recommendations and ratings: The company's net profit for 2017-2019 is estimated to be 201 million yuan, 297 million yuan and 393 million yuan, EPS is 0.94 yuan, 1.39 yuan, and 1.84 yuan. The corresponding price-earnings ratios are 30 times, 20 times, and 16 times, respectively. Give a “buy” rating.
Risk warning: the development of domestic semiconductors and panel displays falls short of expectations