A pioneer in domestic semiconductor testing equipment. Changchuan Technology was founded in April 2008 and listed on the Shenzhen Stock Exchange Venture Board in April 2017. It is mainly engaged in R&D, production and sales of special integrated circuit equipment. Its main products include testing machines, sorters, probe stations, AOI equipment and automation equipment. Since its establishment, the company has always focused on the field of integrated circuit testing equipment. It has been deeply involved in the industry for many years, mastered the core technology related to integrated circuit testing equipment, and has a leading technical level. The product has been recognized by well-known integrated circuit design and testing customers at home and abroad.
The semiconductor test system market is trending upward, and SoC and digital integrated circuit test equipment account for a relatively high share. According to SEMI, the global IC testing equipment market is estimated to be 8.78 billion US dollars in 2022. By product, out of the 5.70 billion yuan domestic IC testing equipment market in 2018, testing machines/sorters/probe stations each accounted for 63.1%/17.4%/15.2%. By application area, the SoC and digital IC test equipment market was approximately US$2.55 billion out of the US$5.633 billion global IC test equipment market in 2018. In 2020, the IC testing equipment market in mainland China was 9.14 billion yuan, and the 2015-2020 CAGR reached 29.3%, higher than the global level in the same period. As the scale of China's integrated circuit industry expands and the production capacity and share of advanced packaging in the sealing and testing industry increases, the demand for test equipment is expected to continue to grow.
Overseas manufacturers dominate the global semiconductor testing equipment market, and there is broad scope for domestic substitution. Integrated circuit testing requires high test accuracy, speed, efficiency, and reliability. The world's advanced test equipment manufacturing technology is basically in the hands of developed manufacturers in the integrated circuit industry, such as the US and Japan, and the market pattern shows the oligopoly of manufacturers such as Teradyda, Edwan, and Kexiu. According to SEMI, semiconductor test equipment from Teradyne and Edwan together accounts for more than 66% of the global testing machine market share. By entering leading domestic testing companies, Changchuan Technology, Huafeng Measurement and Control, etc. have achieved domestic replacement of some semiconductor test equipment, but compared with the revenue volume of overseas leaders Teradyda and Edwin in recent years, the revenue scale has exceeded 2.5 billion US dollars, and Changchuan Technology's revenue scale is less than 500 million US dollars, so there is still plenty of room for replacement.
Endogenous epitaxial is building a comprehensive supplier of semiconductor test equipment. After years of R&D and accumulation, the company has become a leading supplier of testing equipment for integrated circuits in China. The products have been used and approved by first-class integrated circuit companies such as Changdian Technology, Huatian Technology, Tongfu Microelectronics, Silan Micro, China Resources Microelectronics, and Sun Moon Light. While consolidating and developing its existing business, the company focuses on developing related packaging and testing equipment such as probe stations, high-end testing machine products, three-temperature sorters, AOI optical inspection equipment, etc., continuously broadening and upgrading its product line, and actively exploring the middle and high-end markets.
In terms of extension, Changchuan Technology completed the acquisition of STI in 2019. The overall business situation was good after the acquisition was completed. Net profit of 16.024 million yuan and 44.61 million yuan was achieved in 2019 and 2020, respectively.
In 2022, Changchuan Technology plans to acquire 97.6687% of Changyi Technology's shares to 100% of the shares. Changyi Technology's main operating asset is EXIS, and EXIS's core product is a turret sorter. Downstream customers include well-known domestic and foreign manufacturers such as Broadcom, MPS, NXP, BYD Semiconductors, Tongfu Microelectronics, and Huatian Technology.
Changchuan Technology and EXIS have strong synergies in the fields of sales channels and technology research and development. This acquisition will further improve the company's product categories, enhance the company's profitability, and consolidate its core competitiveness. Changchuan Technology Co., Ltd. is currently expanding its business layout in multiple dimensions. Organic endogenous growth is combined with external acquisitions, and growth can be expected. We expect the company to achieve revenue of 24.0/368/4.92 billion yuan and net profit of 2.52/645/935 million yuan from 2023 to 2025, corresponding to the current PE valuation of 102/40/28x, covering the first time, and giving it a “highly recommended” rating.
Risk warning: Risk of new product development falling short of expectations, risk of downstream demand falling short of expectations, and increased industry competition: