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Everbright Securities: North China Venture Buy Rating

January 11, 2019 10:29

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  Strong merger, cast a semiconductor equipment leader.North HuachuangIt was merged by Beijing Xingda's Qixing Electronics and Northern Microelectronics to achieve resource integration and complementary advantages. At present, the company has become the largest manufacturer of high-end semiconductor equipment in China with the largest scale, the widest range of products and the most abundant product systems.

  Industry characteristics:Global monopoly, low self-sufficiency rate. The global semiconductor equipment industry is mainly monopolized by the US, Japan and the Netherlands, and the CR10 market share exceeds 60%. According to SEMI data, it is estimated that by 2020, equipment sales in the mainland will reach 17 billion US dollars, but the self-sufficiency rate of domestic IC equipment is only 1 to 2%.

  Company status:The card position is obvious and the technology catches up. The company is the leader of domestic semiconductor equipment. Under the overall planning of the National 02, the company is responsible for the largest variety of research and development products, and the corresponding market space is the largest. At present, the company is developing rapidly in the fields of photovoltaic, LED, display, packaging and other pan-semiconductor applications; IC equipment is accelerating to catch up, and the international gap is gradually shortening, and many 28nm products have been sold.

  Standing in the moment:Demand driven, manufacturing transfer, rapid development. With the transfer of manufacturing to the domestic market, the demand for domestic semiconductor equipment is expected to exceed 20 billion yuan by 2019, with an average annual growth rate of over 40%; domestic equipment manufacturers are expected to reach 5.2 billion yuan by 2020, with an average annual growth rate of around 23%. As a leader in domestic semiconductor equipment, the company is expected to grow rapidly. Both the demand side and the supply side are seriously mismatched in terms of scale and growth rate. We believe that there are three reasons: limited target customers, limited products, and market-oriented product competition.

  Standing in 2020 and the future:Capacity-driven, mass production promotion, accelerated replacement. As Moore's Law approaches the limit, the industry's technological progress slows down. Combined with 2020, it is the 02 special deadline. The company's technology is expected to gradually catch up with international companies, the process coverage rate is continuously improved, and the mass production promotion capacity is significantly improved. With the help of local advantages, Domestic substitution is expected to accelerate. In the future of 2025 or more, the company will participate in global competition, and only through continuous optimization and innovation can we further increase market share.

  Valuation and rating:We maintain the company's 2018-2020 EPS forecasts of 0.55, 0.89, and 1.37 yuan respectively. The current stock price is 77, 47, and 31 times corresponding to PE. The target price for the 6-month period is 58.27 yuan, maintaining the “Buy” rating.

  risk warning:Fixed risk of failure, industry cyclical risk, technical risk in equipment field, and increased risk of market competition.

(Article Source:Everbright Securities)

                (Editor: DF328)

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