Event
Semi-annual report 2020: the company announced on August 14 that the revenue of the company in the first half of 2020 was 300 million yuan, an increase of 8.26% over the same period last year; the net profit of returning to the mother was 25.93 million yuan, down 90.63% from the same period last year; and the net profit after deducting non-return was 25.29 million yuan, an increase of 80.52% over the same period last year.
Fixed increase plan: the company announced on August 14 that it would raise 1.5 billion yuan for the research and development of high-end photoresist for integrated circuit manufacturing, industrialization projects, integrated circuit key process materials projects and supplementary liquidity. It is issued to no more than 35 specific investors, and the issue price is not less than 80% of the average trading price for the 20 trading days before the benchmark date.
Brief comment
The large investment income base led to a decline in performance. The semiconductor business rapid development company reported a net profit of 15.86 million yuan per quarter corresponding to Q2, down 94% from the same period last year and 58% month-on-month growth. From the statement point of view, year-on-year point of view: ① revenue expanded, gross profit increased by 2.3%, gross profit increased by 12.3 million yuan; expenses, taxes and surcharges during the ② period increased by 2.79 million yuan. The total income and loss of ③ decreased by 309.67 million yuan, the non-operating income and expenditure of ④ decreased by 530000 yuan, and ⑤ income tax decreased by 46.59 million yuan. The total contribution of the above items to the change range of return net profit is-254.11 million yuan, which is basically consistent with the actual change of-254.69 million yuan. Month-on-month point of view: ① revenue scale expanded, gross profit decreased by 2.7%, gross profit increased by 11.99 million yuan; expenses, taxes and surcharges increased by 6.25 million yuan during the ② period. The total income and loss of ③ increased by 1.64 million yuan, the non-operating income and expenditure of ④ decreased by 670000 yuan, and ⑤ income tax increased by 780000 yuan. The total contribution of the above to the change of return net profit is 5.94 million yuan, which is basically consistent with the actual increase of 5.8 million yuan. The company's home net profit dropped sharply compared with the same period last year, mainly due to the impact of investment income on net profit of 261.88 million yuan caused by the replacement of the company's assets in the same period last year. In terms of period expenses, 2020H1 financial expenses increased by 542% compared with the same period last year, mainly due to the increase in bank loans over the same period last year, and the increase in loan interest expenses; R & D expenses increased by 29% over the same period last year, mainly due to the increase in R & D expenses for photoresist and other projects. Income tax expenses fell by 90% compared with the same period last year, mainly due to the increase in enterprise income tax due to investment income from the disposal of long-term equity in Shanghai Xinyi in the same period last year. In terms of cash flow, the net cash flow of 2020H1's operating and fund-raising activities increased by 1156% and 476% compared with the same period last year, mainly due to the increase in special subsidies for science and technology projects and bank loans. The increase in foreign investment and the increase in bank borrowing by the company. The net cash flow of investment activities decreased by 576% compared with the same period last year, mainly due to the increase in the company's outbound investment.
From the perspective of specific products, the revenue of 2020H1 fluorocarbon paint products was 148 million yuan, down 9.6% from the same period last year, and the gross profit margin increased by 1.4%; the revenue from electronic chemical materials products was 117 million yuan, an increase of 37.4% over the same period last year, and the gross profit margin increased by 5.4%. The company's semiconductor business revenue was 140 million yuan, up 34% from the same period last year, including 54.69 million yuan from wafer ultra-pure chemical materials, an increase of 98% over the same period last year, mainly benefiting from the expansion of the industry scale and the acceleration of domestic substitution.
The fixed increase project adds the code high-end photoresist research and development, the domestic substitution is imperative the company takes the photoresist project as the focal point, positively broadens the company semiconductor functional chemical application field. Photoresist is the core material of semiconductor integrated circuit manufacturing, high-end photoresist and supporting key material products have been blank in China. According to the Fuji Economic Survey report, the global semiconductor photoresist market in 2018 is about US $1.3 billion, of which ArF (dry / wet) photoresist market is the largest, reaching US $580 million, accounting for about 45% of the market share of TKRF photoresist reaching US $350 million, accounting for about 27%. ArF photoresist is mainly used in the manufacture of logic chips and high-end memory chips, while the application of KrF photoresist is mainly memory chips. The global photoresist market is basically controlled by Japanese enterprises. Japanese manufacturers account for 70% of the market share of full-category semiconductor photoresist. Japanese manufacturers have a market share of 93% and 80% in ArF and KrF photoresist market, respectively, showing strong control in the high-end market. At present, Europe, the United States, Japan and other countries still prohibit the import of ArF photoresist technology to China, and the domestic replacement of high-end photoresist is imperative.
The company plans to invest 933 million yuan in R & D and industrialization of high-end photoresist for integrated circuit manufacturing, mainly developing photoresist used in ArF dry process in integrated circuit manufacturing and KrF thick film photoresist for 3D NAND step etching. It is estimated that KrF photoresist and ArF photoresist will achieve mass production in 2022 and 2023, with a revenue of nearly 200 million yuan that year. In the future, photoresist products will become another revenue and profit growth point for the company in the semiconductor business, realize the domestic substitution and independent supply of photoresist, and consolidate the company's market position in the domestic semiconductor material field.
Domestic semiconductor materials front-line manufacturers, leading the domestic core technology
The company is mainly engaged in the R & D, production and sales of semiconductor key process materials. The company has two core technologies of electronic plating and electronic cleaning with complete independent and controllable intellectual property rights, and the second generation core technology for wafer plating and wafer cleaning has reached the leading level in China. The company's sales and market share of electronic chemicals in the field of traditional semiconductor packaging remain the first in the country, focusing on R & D and successful industrialization of wafer process ultra-pure chemicals-chip copper interconnection plating solution and etching cleaning liquid. it has become the benchmark material of 25 chip production lines in China, and it is the only one in China that can meet the process requirements of each technology node in the whole process of chip 90-28 nm.
With the development of China's semiconductor industry, the expansion of the scale of integrated circuit manufacturing, and the release of customer orders for ultra-pure materials, the company's current production capacity has been unable to meet customer demand. The company plans to invest 350 million yuan in key process materials for integrated circuits. Chip copper interconnected ultra-high purity copper sulfate plating solution series, chip etching ultra-pure cleaning solution series and other products will increase annual production capacity by 17000 tons. After reaching production, the average annual operating income is expected to be 551 million yuan. In the future, with the further growth of the company's products, it will help to increase the company's market share, enhance the company's overall competitiveness, and speed up the transformation and upgrading of the business.
As of 2020H1, the company's fluorocarbon paint business accounted for nearly 51% of the company's revenue. On the one hand, we will continue to develop and improve energy-saving, environmentally friendly, high-quality and efficient fluorocarbon powder coatings, and continue to develop high-end anticorrosive coatings for marine (ships, docks), nuclear power and other high-end coatings. On the other hand, it extends to the downstream of fluorocarbon paint to integrate the production technical resources of Coplar Company. The new environmental protection and energy saving fluorocarbon aluminum coating project carried out by Sun Company in Shandong Province has formed large-scale production capacity, and the environment-friendly powder coating of Kopule powder of Sun Company has been sold in batches and began to make a profit. Affected by the epidemic situation and the bottleneck of fluorocarbon powder coating technology development, the company's paint business operating income in the first half of the year was 148 million yuan, slightly lower than the same period last year.
New projects open capacity bottlenecks and leadership is once again strengthened
The company invests 600 million yuan to build a second production base in Hefei. after reaching production, the first phase of the project will form an annual production capacity of 15000 tons of ultra-pure chemical material products, including 4500 tons of chip copper interconnection ultra-high purity electroplating solution series products. 8500 tons of chip high-choice ultra-pure cleaning solution series products, chip high-resolution photoresist series products 8500 tons Chip-level packaging and integrated circuit traditional packaging pin surface treatment of functional chemical materials 1500 tons. This project will open the bottleneck of the company's production capacity, greatly increase the production capacity of the company's ultra-pure chemical materials, and enhance the company's leading position in ultra-pure chemicals.
It is estimated that the return net profit of the company in 2020 and 2021 will be 0.80,158,223,158 times of PE, respectively, maintaining a neutral rating.
Risk analysis: high valuation risk, photoresist research and development related risk, technology substitution risk and so on.