Investment points:
Company announcement: The company became the winning bidder for the process pipeline system for the memory production line construction project of Fujian Jinhua Integrated Circuit Co., Ltd., with a bid amount of 348 million yuan. The estimated completion time is June 20, 2018. As of this announcement, the company has received a total of 1.6 billion yuan semiconductor cleanroom orders from Hefei Changxin and Fujian Jinhua. Another storage factory, Changjiang Storage, has not yet opened a tender. The company is also extremely competitive.
The high-end electronics cleanroom industry has entered a period of explosion, and IC and panel cleanrooms are about to become a 100 billion market. The semiconductor and panel industry has led to a period of investment explosion. In the past three or four years, an average annual industrial investment growth rate of 40% has been determined, and long-term annual investment has maintained a growth rate of close to 20%. According to estimates, the cleanroom market in the electronics industry reached 20 billion yuan in 2016 and will be close to 60 billion yuan by 2019. The market space is large and the growth rate is fast.
The clean room industry in the high-end electronics industry has high barriers and high concentration. 1) The concentration of the industry is high. The electronics industry has a high concentration of clean rooms, and five companies occupy 90% of the market. In terms of engineering design, Taiji Industrial and the 10th Institute occupy an absolute position. CLP 2, CLP 4, Yaxiang Integrated, Jiangxi Hantang, and MW occupy 90% of the market for cleanroom construction. 2) Industry barriers are extremely high, and long-term project experience is required to ensure the yield and quality of terminal products. The cleanroom engineering service industry has high barriers. The industry has always been run by only a few companies. The requirements for technology, project experience, capital, and qualifications are very high. Only by accumulating long-term operation experience can we guarantee the yield of the final product.
The company has rich project experience and is highly recognized by the owners. The company's customers include many internationally renowned semiconductor manufacturers. At present, it has accumulated experience in constructing more than 2.1236 million square meters of cleanroom projects. It continues to win bids for major projects from owners such as TSMC, SMIC, Hefei Changxin, Fujian Jinhua, and Shenzhen Tianma. It has completed projects with the highest yield rate, and has been widely recognized by the market.
High-end electronics industry clean room technology requirements are extremely high, and the company has industry-leading core technology. The company has applied for 46 patents, and has also digitized and scientifically digitized years of engineering experience for production process and product yield databases in the IC semiconductor and optoelectronics industries to provide data support for the company's subsequent underwriting and implementation of engineering projects. In addition, the company has industry-leading “computational fluid dynamics analysis application technology” and “air sampling and analysis technology”, which can provide customers with pre-simulation analysis and post-sampling analysis, optimize clean room layout, improve production processes, reduce production costs, and improve finished product yield, and greatly improve the stability and reliability of clean room engineering. The company is also developing micro vibration measurement technology and air molecular pollution control for the highest level of cleanliness requires customers to build clean rooms.
The company is one of the leading enterprises with the highest yield of IC and panel cleanroom projects in mainland China. Benefiting from rapid growth in IC and panel investment in 17-19, the company has strong project experience and technical moats. It first benefited from the highest degree of certainty, maintained profit forecasts, and maintained a “buy” rating. The company's revenue for 17/18/19 is estimated to be 27/3.5/4.6 billion yuan, up 29.8%/31.8% year on year, and net profit of 2.3/3.15/437 million yuan, up 39%/37.1%/39% year on year. EPS per share is 1.08/1.48/2.05 yuan, corresponding to 17/18/19 PE, 25/18/13 times, respectively.