Key points of investment
Huaya Intelligence: leading supplier of semiconductor precision metal parts
The company focuses on semiconductor precision metal parts. Customer resources are of high quality. It has entered leading supply chain systems such as AMAT and Zhongwei, which are scarce. The company's gross profit margin and net interest rate in 2020 were 39.85% and 19.49% respectively. Among them, the gross margin of the semiconductor business was as high as 56.50%. The 2016-2020 operating income CAGR was 8.77%, and net profit attributable to the mother was 9.16%. 2020 benefited from the resumption of growth in the global semiconductor market, the company's performance growth accelerated, and rising profitability contributed to performance elasticity.
Selected downstream, layout growth
1) Semiconductor equipment: International semiconductor giants have expanded production one after another, and upstream equipment ushered in a 3-5 year golden period. SEMI expects fab equipment spending to grow 16%/15.5%/12%, respectively, in 2020-2022. Wafer equipment spending is expected to hit new highs in the next three years. The company's products cover major semiconductor equipment, and customer resources are of high quality. As a core sector, it is expected to directly benefit from the wave of semiconductor equipment expansion.
2) Electricity and new energy: Investment in power grids is picking up, and demand for PV installations remains high. The China Photovoltaic Industry Association predicts that the new PV installed capacity in China will rise from 48.2 GW to 55 GW to 65 GW in 2021, with an annual average of 70 GW to 90 GW during the “14th Five-Year Plan” period. The company's products are mainly used in photovoltaic inverters, etc. As an advantageous sector, it is expected to benefit from continued steady growth in industry sentiment.
3) Medical devices and rail transit: Large population base+aging population, China's medical market is improving over a long period of time; transportation powerhouse policies such as the “123 Travel Traffic Circle” have been implemented to establish long-term rail transit construction requirements for the next 15 years. The company's products are mainly used in medical operating tables and towers, high-speed rail seats and air conditioning duct systems, urban rail transit traction systems, etc. As a potential sector, there is plenty of room for future development.
Fundraising projects break through production capacity bottlenecks and open up a new round of growth
The company's business expansion is limited by high production capacity saturation. The IPO plans to raise 350 million yuan for the expansion of precision metal structural components and the construction of an R&D center. Among them, the production capacity expansion project company expects the construction period to be 2 years and the production period will reach 5 years. According to the company's prospectus, the company expects an average annual increase in operating income of 410 million yuan and an average annual net profit of 75 million yuan after delivery, which is expected to usher in a new round of growth.
Profit forecast and investment rating: We expect the company's net profit from 2021-2023 to be 1.0/16/240 million yuan respectively, up 44%/59%/49% year-on-year respectively. The current market capitalization corresponds to PE 53/34/23 times. Considering the company's broad development prospects in the field of semiconductor precision metal parts, the “increase in holdings” rating was applied for the first time.
Risk warning: risk of macroeconomic fluctuations; risk of fluctuations in the semiconductor industry; risk of declining gross margin; risk of increased market competition; risk of customer industry transfer.