Leading semiconductor component company, leading the world in manufacturing process: Fuchuang Precision is a leading domestic semiconductor equipment parts company. The company focuses on precision manufacturing technology for metal parts. The main products are divided into four categories: process components, structural components, module products, and gas pipelines, which are used in semiconductor lithography machines, etching machines, and film deposition equipment. The company has now been able to mass-produce semiconductor components in the 7nm process, and process completeness is at the leading level in the world. In 2022, the company achieved revenue of 1,544 billion yuan, a year-on-year increase of 83.18%, net profit to mother of 246 million yuan, a year-on-year increase of 94.19%, and gross margin of 32.68%. 23Q1-Q3's revenue was 1,390 billion yuan, up 37.28% year over year, maintaining a rapid growth trend.
The semiconductor industry market is expanding rapidly, and the market space for precision components is broad: The semiconductor equipment industry market is growing rapidly. According to SEMI, global semiconductor equipment sales in 2022 were US$107.4 billion, which is expected to reach US$140 billion by 2030. Precision components are the backbone of the semiconductor equipment industry, accounting for 50%-55% of the semiconductor equipment market share, of which the market space involved in the company's products is about US$24.1 billion in 2022. Currently, the global market share of the company's products is less than 1%. As the localization of domestic semiconductor equipment components accelerates, there is plenty of room for the company's market share to increase in the future.
The revenue scale is expanding rapidly, and production capacity needs to be further released: the company's revenue scale is rapidly expanding, there are sufficient orders on hand, production capacity continues to be invested, and the capacity utilization rate for process and structural components is above 90%. The company plans to build new plants in Shenyang, Nantong and Beijing in the future. As future production capacity is released and scale effects become prominent, the company's profitability is expected to remain at a high level.
The three core technologies are leading the world, and the main products break the monopoly of the US and Japan: the company's core technologies mainly include precision machinery manufacturing, special surface treatment processes, and welding processes. These three core technologies are all independently developed by the company and are protected by dozens of patents. They are widely used in the company's process components, structural components and gas pipeline products, and are at the leading level internationally. Relying on the advanced 7nm process and the world's leading process level, the company's main products have gradually broken the monopoly of Japanese and American companies and won recognition from foreign customers.
Profit forecast, valuation and rating: We predict that in 2023-2025, the company will achieve revenue of 21.22/29.31/4098 billion yuan, net profit to mother of 2.10/3.55/ 490 million yuan, EPS of 1.00/1.70/2.34 yuan respectively, and current stock price corresponding to PE 49/29/21 times, respectively. Considering the high growth brought about by domestic substitution of semiconductor components, and that profit space will be further freed up after the company expands production, the first coverage was given an “increase in wealth” rating.
Risk warning: the risk of the company being replaced by other suppliers; the risk of international trade friction; the risk that the company's process development progress falls short of expectations.