Yongxi Electronics: A late-stage star in the integrated circuit packaging and testing industry. Established in 2017, Yongxi Electronics is a packaging and testing company focusing on the field of advanced packaging. All of the company's products are high-end advanced packaging forms. It mainly engages in four categories: high-density fine-pitch bump inverted products, system-level packaging products, flat leadless packaging products, and microelectromechanical system sensors. In the process of independent research and development, the company has shown outstanding technical advantages and advanced processes. Various products have entered the supply chain of top integrated circuit design companies. Its products, services and technology cover terminal application scenarios such as communications, consumer electronics, artificial intelligence, and the Internet of Things.
Since its establishment, the company's total revenue has grown rapidly. Revenue increased from 366 million yuan in 2019 to 2.177 billion yuan in 2022, with an average annual compound growth rate of 81.19%. In the first three quarters of 2023, the company achieved revenue of 1,631 billion yuan and net profit of 120 million yuan. Affected by the cyclical downturn in the closed testing industry, short-term performance was under pressure. With the official completion of the second phase of the project, the recovery of operating rates, and the recovery of the demand cycle in the downstream market, profitability is expected to return to a growth trajectory.
Mainly engaged in packaging and testing business, focusing on high-end advanced packaging. Advanced packaging is an important path for the continuation of Moore's Law for integrated circuits. Packaging forms have been developing according to the principles of miniaturization and high integration. From formal packaging to inverted packaging, package size continues to shrink. From single-chip packaging to multi-chip packaging, package integration also continues to improve.
Yongxi Electronics has outstanding process advantages and technological advancement in the fields of SiP, FC, QFN/DFN, etc.
At present, the company has successfully achieved stable mass production of technologies such as system-level hybrid packaging technology for flipped and wire-bonded chips and 5nm wafer flipping technology. At the same time, the company has mastered system-level packaging electromagnetic shielding (EmiShielding) technology, chip surface metal bumps (bumps) technology, and is actively developing wafer-level packaging technologies such as FANin/fan-out, 2.5D/3D, high-density system-level packaging technology, and large-size FCBGA packaging technology, etc., providing deep technical reserves for subsequent companies' performance development.
A recovery in the closed testing boom can be expected, and domestic closed testing is rapidly rising. WSTS predicts that this round of cyclical decline in the semiconductor industry is expected to bottom out in Q3 2023. At the same time, as design manufacturers remove inventories and release new products, the overall operating rate of Yongxi Electronics showed a steady upward trend in Q2 of 23, and reached a full state in the second quarter.
Since its establishment, Yongxi Electronics has also achieved rapid revenue release and share growth, and has developed well. According to statistics from the Core Thought Research Institute, the company's sales scale ranked sixth among domestic sealed test manufacturers in 2022. The company's fund-raising project SiP production expansion plan is expected to be ready for use by the end of 2023, at which time it will increase the production capacity of 145 million SiP modules. Adequate production capacity reserves are expected to help the industry show elasticity in the upward cycle of performance.
Profit forecast and valuation: As a late-stage expert in domestic packaging and testing companies, Yongxi Electronics focuses on high-end advanced packaging tracks. We expect the company's 2023-2025 revenue to be 25.77/33.17/4,023 billion yuan, respectively, and net profit of 0.53/1.99/410 billion yuan respectively, corresponding to current price PE 252/67/33 times.
We are optimistic about the company's growth in the field of advanced packaging and maintain the “recommended” rating.
Risk warning: Downstream economic recovery falls short of expectations; product development falls short of expectations; production capacity cannot be digested as expected; industry competition is intensifying.