Event: on March 14, 2019, Taiji Co., Ltd. plans to invest 100 million yuan to set up a wholly owned subsidiary Beijing Taiji Semiconductor Co., Ltd. in Beijing Yizhuang Economic Development Zone. At the same time, the number of shares to be issued does not exceed 20% of the company's total share capital of 213120000 shares before this issue, that is, no more than 42624000 shares are used for new high-power semiconductor device projects, including IGBT module closed test line, SiC semiconductor power device closed test line, semiconductor pulse power switch production line and so on.
Comments:
1) increase fund-raising to enter the market of middle and high-end power devices. The company increased projects to invest in IGBT, SiC and other high-end power device products. After the project is put into production, it will form a monthly production capacity of 40,000 IGBT and 6500 high-power semiconductor pulse power switches. China's IGBT products are heavily dependent on imports, and downstream application manufacturers mainly purchase imported products such as Infineon, Mitsubishi, Fuji Motor, SemiControl and so on. With the promotion of the company's IGBT project, China's heavy reliance on imported IGBT is expected to be alleviated.
2) raise money to build a production line for sealing SiC devices and lay out the third-generation semiconductor business. SiC device is one of the next generation technology directions of power semiconductors, which has the advantages of low energy conversion loss, small device size and high conversion efficiency. At present, power semiconductors are mainly made of silicon, while SiC devices are in the initial stage of industrialization, which are mainly used in micro photovoltaic inverters, automotive on-board charger and other scenes that require stringent efficiency and volume. At the same time, due to the initial stage, relatively few participants, Taiji cut into SiC at this time is expected to seize the growth of industry dividends. SiC has obvious advantages over silicon devices. Compared with silicon devices, the energy loss of SiC devices is reduced by 85%, and the size is reduced by more than 2%. Technological change is expected to enable Taiwan-based shares to achieve corner overtaking, and accelerate to shorten the gap between domestic and foreign manufacturers in medium and high-end power devices.
3) the demand for power devices is strong, and the tide of shortage accelerates the process of domestic substitution. Since 2017, power devices have been in a state of extended delivery and out of stock. Due to the capacity bottleneck, foreign power giants can not meet the rapidly growing needs of downstream customers, which creates favorable conditions for domestic manufacturers to break through high-end applications and new customers. Under the tide of shortage, the introduction of domestic power devices supply chain by downstream manufacturers is obviously accelerated. In addition, the uncertainty of the Sino-US trade war accelerates the urgency of domestic substitution, so it is imperative for downstream manufacturers to establish an independent and controllable supply chain system in the field of power devices. Under the above two favorable factors, the pace of upgrading of Taiji shares to mid-and high-end power products is expected to exceed market expectations.
4) Investment suggestion: the income of the company in 2018-20 is expected to be 418 million yuan, 554 million yuan and 726 million yuan respectively, the net profit returned to the mother is 86 million yuan, 129 million yuan and 181 million yuan respectively, the EPS is 0.40,0.60,0.85 yuan respectively, and the corresponding PE is 38.25,25.51,18.12 times respectively. We are optimistic about the company's strategy to upgrade the IGBT and SiC chip industry and maintain the recommended rating.
Risk Tips:
(1) the risk of slow progress in the construction of fund-raising projects
(2) to increase the risk of approval by the SFC.
(3) the risk of the decline of the prosperity of the industry
(4) the risk that the industrialization of high-end power devices is not going smoothly.
