A leading EDA company, the “panda” torch has been passed down to the present day. Established in 2009, Huada Jiutian is a leading domestic EDA company. Chairman Liu Weiping participated in the development of China's first independent intellectual property EDA tool, the “Panda ICCAD System”. The company provides customers with full-process EDA products, solutions and corresponding technology development services, and its products have been deeply applied by leading domestic integrated circuit companies such as Huahong, SMIC, and BOE. In 2018-2022, the company's revenue continued to grow rapidly, from 151 million yuan to 798 million yuan, of which EDA software sales were the company's main business, achieving revenue of 678 million yuan in 2022.
EDA: The jewel in the crown of integrated circuits. The big three overseas companies monopolize the market, and domestic manufacturers are encouraged by policies to usher in a golden period of development. As an upstream part of the integrated circuit industry, the importance of EDA and its strong leverage effect within the industry have been widely recognized by people. The global EDA market is worth about 10 billion US dollars. Currently, Synopsys, Cadence, and Siemens EDA manufacturers have a monopoly pattern. In 2020, the three major EDA giants had a share of over 77% of the global market. China's EDA industry began in the 1980s, but development stagnated for a while, and it wasn't until around 2008 that a number of EDA companies appeared in China. Since 2015, the country has vigorously promoted the development of the semiconductor and integrated circuit industry, and at the same time compounded the influence of various geopolitical factors, the EDA industry has ushered in a new golden period of development under the wave of domestic substitution.
We can look forward to the following three aspects for the next nine days at Huada University. 1) The whole process does not change the original intention: For customers, the whole process means a 1+1>2 user experience; for EDA manufacturers, the whole process means a deep understanding and control of the entire semiconductor industry chain. Since its inception, Huada Jiutian has been firm in the direction of full-process development. The development pace and planning of the whole process are clear, and it has continuously accelerated the completion of products and tools in various fields. It is hoped that the full-process layout will be achieved as soon as possible, thus enhancing overall competitiveness. 2) Breaking through the wafer manufacturing side: In the EDA “Iron Triangle” ecosystem, the use and feedback of fabs cannot be ignored. In recent years, Huada Jiutian has accelerated the layout of wafer manufacturing end tools, using “tool+service” two-wheel drive to break through wafer manufacturing, thereby speeding up the entire “process-design-manufacturing” chip production process. 3) Talent team building: Talent is an important asset in the EDA industry, and the knowledge-intensive nature of the EDA industry means that the gathering of outstanding talents will bring about a better scale effect. Huada Jiutian has always targeted outstanding talents in the industry, leading the industry in terms of number of employees and incentive systems, and has vigorously strengthened the construction of a reserve talent pool to reserve sufficient momentum for subsequent continuous development.
Profit forecast and investment advice: We expect the company's revenue for 2023-2025 to be 10.21/13.26/17, respectively.
Of the 2.9 billion yuan, net profit attributable to mother was 200/0.37/147 million yuan, respectively, and the corresponding PS was 45/34/26 times, respectively.
In the short term, the company is expected to benefit from the bottom of the semiconductor and integrated circuit industry cycle and achieve industrial prosperity. In the long term, the company is a leading domestic EDA enterprise, with obvious comprehensive competitive advantages in products and technology, customer resources, and talent accumulation, and is expected to quickly achieve a full-process layout in multiple fields. However, considering the company's current high valuation level, based on the above, we covered the company for the first time and gave it an “gain” rating.
Risk warning: risk of loss of technicians and rising technical personnel costs; risk of product development and technology upgrades falling short of expectations; competition risk due to relatively limited EDA market size and high concentration; risk of blocked investment, mergers and acquisitions or poor business coordination; risk of international trade friction; risk of delayed information or untimely updates in public data used in research reports; risk of deviations in industry size measurement, etc.