Northern Huachuang (002371) 2018 Annual Report Review: Domestic Production of Storage Line Equipment Helps High Growth of the Company
Event: On April 23, the company released its annual report and achieved operating income of 33 in 2018.
2.4 billion, an annual increase of 49.
Realize net profit attributable to shareholders of listed companies 2.
3.4 billion, an annual increase of 86.
Comments: 1) The annual report performance is in line with expectations, and IC equipment drives the company’s high growth.
Company performance 2.
3.4 billion, falling in the previous guidance2.
Near the median of 76.
The company’s 18Q4 performance is very good, with single-quarter revenue increasing by 82% per year, the highest single-quarter growth rate since listing.
Yangtze River Storage entered a large-scale expansion phase in the second half of 2018, driving the domestic IC equipment industry into a high growth stage.
From a micro perspective, the revenue of North China Huachuang in the central and southeast regions increased by more than 600 million yuan. Customer orders from Changjiang Storage, Huahong, and SMIC were the main growth engines.
2) Gross profit margin increased by 3 over the same period last year.
5%, IC equipment business scale dividend showed.
The company’s gross profit margin was 18 in Q4.
1%, an increase of 3.
The IC equipment industry is an industry with high R & D investment and high profit margin.
The global leading manufacturers in the field of IC equipment have a gross profit margin of about 45%, and the profitability of Northern Huachuang has a certain gap from overseas industry leaders.
One of the core reasons for the difference in profitability is the effect of scale.
With the increase of the company’s equipment of the same category, gross profit margin is expected to continue to rise steadily.
3) 19-21 is the peak period of domestic factory construction, and the company has continued to grow rapidly.
The year 19-21 is the peak period for the domestic wafer fabs to build. Overlapping the IC equipment localization needs of domestic wafer fabs, domestic IC equipment manufacturers usher in an unprecedented golden development period.
Beifang Huachuang is the company with the widest range of IC equipment in China. The differences between PVD, furnace tubes and other equipment from abroad have entered a large-scale mature application stage. The application of etching equipment and cleaning machines has also continued to expand.
The rich product line has laid the foundation for the steadily gradual development of North Huachuang. The product is gradually divided into a number of parts and gradually entered the mature stage. The company’s ability to continue high growth continues.
4) The Northern Huachuang product line is etched overlappingly, and the two main tracks for film growth are becoming wider and wider.
Generally speaking, the IC equipment products of Northern Huachuang can be classified into four categories, one is etching, the other is thin film production, the third is wet process, and the fourth is diffusion.
In these four fields, North China provides customers with corresponding equipment and process solutions.
In terms of etching, the company has been able to meet customer needs in terms of STI etching, and is applied to large-scale production lines of Logic, CIS, Nor Flash and other chips.
The company has obvious advantages in Al Pad PVD. North China Huachuang’s PVD equipment can fully match the customer’s baseline in the 14nm production line.
In the process below 28 nm, PVD is used to deposit TiN as a hard mask to achieve etching.
Beihua Huachuang’s etching equipment is widely used downstream. Outside the IC production line, the company actively expands applications in flat panel displays, MEMS sensors, IGBTs, and Mosfet.
Rich application experience continues to improve the quality 上海夜网论坛 of the company’s etching product line.
Taking IGBT etching as an example, there are a large number of U-shaped or V-shaped morphologies in the device structure. The production line requires extremely high morphological accuracy of the etching equipment. The breakthrough of the company’s products in this difficult area has developed otherThe strength of the application field has laid the foundation.
In terms of thin film growth, the company’s product line is suitable for three major areas: logic chip manufacturing, DRAM chip manufacturing, and Nand Flash chip manufacturing.
The ten-chamber thin film deposition platform developed by the company has stable and excellent process performance, and is currently the largest metallization process platform, and is widely recognized by customers.
In terms of wet process technology, 云尚丽体验网 the company has a single-chip cleaning machine and a 漕 -type cleaning machine, which has excellent performance in various cleaning processes.
In terms of diffusion process technology, the company’s oxidation diffusion equipment has strong competitiveness in reliability and available time.
5) For the first time, the track widening logic of the company’s product line under the 3D Nand trend is demonstrated.
Under Moore’s Law and 3D Nand technology trends, the company’s investment in a single production line accounts for a rising proportion.
In the advanced process technology of 14 nanometers and below, the number of etching and thin film growth processes has increased significantly, and the proportion of equipment procurement may continue to rise.
In terms of storage applications, the technology of the storage chip technology has been used to convert from 2D NAND to 3D NAND, and the proportion of thin film equipment purchased in a single production line has increased from 30% to 75%.
6) Under the tide of wafer fab construction, the total customer demand for Northern Huachuang equipment exceeded 300 billion yuan, and the company’s products accounted for 39% of equipment investment in a single production line.
According to the company’s non-public issuance data, the planned production capacity of the 12-inch wafer fab under construction in mainland China will exceed one million pieces, and its investment will exceed one trillion yuan. The company’s etching machine, PVD, ALD, annealing equipment, vertical furnace and cleaning machine, the overall market size exceeds 300 billion yuan.
The company’s IC is equipped with etching machines, PVD, ALD, continuous equipment, vertical furnaces and cleaning machines, accounting for 21% of the total investment in production line equipment.
5% and 5.
3%, comprehensively, the company ‘s IC equipment covers 39% of the investment in production line equipment.
Rich product portfolio casts Northern Huachuang as a semiconductor equipment platform company, and the company is expected to form a good growth pattern of gradually increasing sales of product lines.
Investment suggestion: Northern Huachuang has a rich portfolio of IC equipment product lines, covering core processes such as etching and thin film deposition. At the same time, 2D Nand has become the 3DNand company’s application track widening bandwidth.
After the Jinhua incident, there was a strong demand for localization of warehouse industry equipment.
We believe that the company’s rich product portfolio will form a good growth pattern of gradually increasing scale, and the logic of continued high growth is clear.
It is expected that the company’s revenue for 2019-21 will be 46.
9.9 billion, 67.
5.9 billion, 94.
6.7 billion yuan, net profit attributable to mothers was 5.
100 million, 7.
2.5 billion, 10.
1.7 billion, corresponding PE is 57/40/29 times, maintaining the “recommended” level.
Risk reminders: the risk of weakening global demand for semiconductors due to the weakening of the global macro economy; the risk of uncertainty in Sino-US trade disputes; the risk that domestic wafer manufacturing companies will suffer from overseas technology blockades; and the risk that domestic semiconductor equipment transfers will progress slowly.