Sai Microelectronics: the acquisition of Sweden Silex transformed into a global leader in the field of pure contract manufacturing of MEMS.
The company is deeply engaged in the field of MEMS microsystems and listed on the gem in 2015, mainly engaged in navigation business and avionics business. In 2016, the company acquired a controlling stake in Silex, a leader in Sweden's MEMS contract manufacturing field, and planned to build a Fab3 8-inch MEMS mass production plant in Beijing in the same year. At present, the company's main business is divided into MEMS development, MEMS contract manufacturing, GaN epitaxial materials and power devices.
The company's MEMS products cover silicon-based microphones, inertial sensors, microlenses, microfluidic, RF filters, silicon light, etc., with customers in various industries around the world. The company clings to some of the largest main tracks in the MEMS market (radio frequency filter, pressure sensor, combined inertia, silicon), and has a high ceiling for future growth.
In the era of the Internet of things, MEMS ushered in a high economic development opportunity, domestic production capacity is scarce under the background of domestic substitution.
MEMS sensor simulates and expands human senses, has the advantage of miniaturization, and is the key node technology to obtain information in the era of the Internet of things. According to YOLE, the global MEMS market will reach US $18.3 billion and CAGR will reach 7.2% by 2026. China is the largest market of MEMS in the world. In the future, with the development of mixed reality, intelligent network connected automobile, industrial Internet, AIoT and other industries, it will bring high prosperity development opportunities for MEMS. At present, although there are many domestic manufacturers who distribute MEMS capacity, the real capacity with batch capacity and multi-platform process is quite scarce, and the self-sufficiency rate is estimated to be less than 20% at present. We believe that with the increase of MEMS market demand, the market share of MEMS OEM will further increase in the future. Under the general trend of domestic substitution, MEMS design start-ups have increased rapidly in recent years, and there is a rigid demand for domestic pilot-chip production capacity, while design companies are worried about technical leakage when they seek the cooperation of IDM manufacturers; in addition, pure-generation factories can help design companies to commercialize quickly through continuous process experience accumulation.
The production lines of Sweden and Beijing complement each other, and the company's production capacity will be released soon.
After 20 years of ploughing MEMS, Sweden Silex has experienced the test of mass production and has a comprehensive reserve of technology in the field of MEMS. MEMS has a high degree of customization. Silex has mastered the key management experience of process standardization and mass production customization by optimizing the development process through the reusable SmartBlock process module.
At present, the Swedish production line (Fab1&Fab2) is located in the process development + small-scale production platform, relying on long-term process development experience to win the favor of large customers, including global AR/VR leader, lithography machine customers, DNA sequencing equipment customers, well-known silicon customers and so on. Beijing production Line (Fab3) is located in the large-scale production line, with the rapid release of the first phase production capacity (120,000 pieces per year) and the synchronous construction of the second phase production capacity (240,000 pieces per year). At present, the products entering mass production and trial production include MEMS silicon wheat, e-cigarette switch, radio frequency filter and so on.
With the rapid growth of GaN market, the company's epitaxial production capacity is gradually released, and power devices pay close attention to the mobile charging market.
According to the YOLE report, the global GaN power device market is growing at a compound growth rate of 59% from US $126 million in 2021 to US $2 billion in 2027, with fast charging as the main demand in the consumer electronics sector and the largest GaN market, while automotive GaN power devices will break out at a compound growth rate of 99%. The company's GaN field provides GaN power device products through its holding subsidiary Ju Neng Chuangxin. Sun Ju Neng Crystal Source has built an annual production line of 10,000 GaN epitaxial materials in Qingdao, while the company has built a GaN chip manufacturing line through a shareholding company with a production capacity of 5000 wafers per month. The company's deep layout of the mobile charging market has formed large-scale revenue, and the revenue is expected to grow rapidly with the breakthrough of capacity bottleneck in the future.
Investment suggestion
In the short term, with the breakthroughs of customers such as silicon microphone, filters, inertia, microscopes and other customers and the rapid climbing of capacity utilization, the company's performance will usher in an improvement inflection point; from a medium-term perspective, with the improvement of the gross profit margin of the Beijing production line, the scale effect of the expense rate and the GaN business on the right track, the company's overall profitability will show a trend of rapid growth. In the long run, the company is positioned as the leader in MEMS foundry with global production capacity layout. Through the acquisition of Fab5, investment in Fab6, Fab7 and so on, there is huge room for imagination.
We forecast that the company's 2022-2024 homing net profit is 55 million yuan, 120 million yuan and 276 million yuan respectively, and the current price-to-earnings ratio is 183-84-36. At present, the company's PB (TTM) is 1.96, and the average PB (TTM) of comparable foundry companies in the industry is 3.0. with the significant improvement in performance, the valuation is also expected to be repaired. For the first time, we gave the company a "buy" rating.
Risk hint
Beijing production line's self-groping process led to slower-than-expected customer introduction, lower capacity utilization led to a decline in gross profit margin, new MEMS foundry capacity could not be digested resulting in idle risk, huge capital expenditure on new capacity may have cash flow or financial cost risk, German Fab5 acquisition failure risk, core R & D personnel loss risk, government subsidy uncertain risk.