On Monday, March 26, CLP Huada Technology (00085.HK) released its 2017 results. For the year ended December 31, 2017, it was derived from continuing operations, which was mainly from the company’s wholly-owned subsidiary Beijing Hua. Great Electronic Design Co., Ltd. generated revenue of HK$1.453 billion, an increase of 6.9% year-on-year; profit attributable to holders of corporate equity was HK$220 million, a decrease of 79.3% year-on-year; basic earnings per share was HK10.84 cents, with a dividend of 3.0 HK cents per share. Huada Electronics is one of the earliest chip design companies in China. It is the No. 1 global supplier of security and certification chips in the world and adopts the fabless semiconductor company business model. March 29, 2018 CEC Huada Technology (00085.HK) last traded at HK$1.15, with a market value of HK$2.334 billion.
On Wednesday, March 28th, Shanghai Fudan (01385.HK) released its 2017 results. For the year ended December 31, 2017, the company realized consolidated revenue of RMB 1.398 billion (the same unit below), which represents a year-on-year increase of 17.7%; Net profit 2.12 billion yuan, a year-on-year decrease of 0.06%; basic earnings per share of 33.88 points. Shanghai Fudan University, which is known as Fudan Microelectronics (returned to the existing name when transferred to the main board of the Hong Kong Stock Exchange). The main chip products are security and authentication chips. , Non-volatile memory, smart meter chip and Beidou chip, etc., also use fabless semiconductor company business model. March 29, 2018 Shanghai Fudan (01385.HK) last traded price of 6.57 Hong Kong dollars, the total market value of 4.332 billion Hong Kong dollar.
On Thursday, March 29th, SMIC (00981.HK) released its 2017 results. As of December 31, 2017, the Group's total revenue reached a new high of US$3.101 billion, an increase of 6.4% year-on-year; gross profit was US$741 million. , The year-on-year decrease of 12.83%; Profit attributable to owners of the company was US$180 million, a decrease of 52.29% year-on-year; Revenue from the 28-nm process set a new high to 8.0% of total revenue, compared to 2016 revenue growth of 4.4 times. The international basic earnings per share for 2017 is US$0.04. SMIC is the No. 1 domestic and world-leading foundry. This type of OEM is exclusively for Qualcomm, Broadcom, Battersea and Shanghai Fudan Semiconductor. The company provides processing services. On March 29, 2018, SMIC (00981.HK) last traded at HK$10.26, and HK market’s total market value was HK$50.569 billion.
On Thursday, March 29th, Hua Hong Semiconductor (01347.HK) released its 2017 annual results. For the year ended December 31, 2017, the Group's total revenue increased by 12% year-on-year to 808.1 million US dollars; the annual profit reached 145 million yuan. USD, which rose by 12.8% from 2016. EPS was US$0.14. The final interest rate is expected to be HK$0.31 per share. Hua Hong Group’s Hua Hong Semiconductor is the world's leading 200mm pure wafer foundry, focusing on R&D and manufacturing. Professional application of 200mm wafer semiconductors, especially embedded non-volatile memory and power devices. On March 29, 2018, Hua Hong Semiconductor (01347.HK) last traded at HK$15.54 with a total market value of HK$16.153 billion.
Is it worth valuing?
Compared with the A-share market, it seems that Hong Kong stocks are indeed the value of the listed companies in mainland China. Today, China’s monopoly of the global electronics manufacturing industry’s output value has become the largest in the country due to the need to import a large number of integrated circuit products every year. In the case of imported products, the State Council promulgated the “Outline for Promoting the Development of the National IC Industry”. Under the background of the central government and local governments attaching great importance to the development of integrated circuit industries and the introduction of industrial development funds and various preferential policies, Chinese integrated circuit companies are welcome. An unprecedented opportunity has come. How to seize this opportunity and quickly develop into the focus of the attention of the board of directors and management of IC companies in this comprehensive and favorable situation.
For example, Ziguang Guoxin (002049), which holds an important position in safety and authentication chips in operating income, has also recently released its 2017 performance. The company’s operating income was RMB 1,829 million, an increase of 28.94% over the same period of last year. The net attributable to shareholders of listed companies The profit was RMB 280 million, a year-on-year decrease of 16.73%; the company's closing stock price was RMB 51.97 on March 30, with a total market value of RMB 31.54 billion, which is much greater than that of an integrated circuit design company and CEC Technologies, which sells security and authentication chips. And Shanghai Fudan, which is higher than the revenue of up to 800 million US dollars Hua Hong Semiconductor. This includes a multiple of P/E, a dozen times the gap, it can be seen Hong Kong stocks and A shares in the valuation of integrated circuits such industries are completely different.
Another example is that Hunan Guoke Microelectronics Co., Ltd. (300672), which was listed on the Shenzhen Stock Exchange on July 14, 2017, announced its performance in 2017 on February 27: Total operating income for the year 2017 was RMB 412 million, a decrease of 15.80 year-on-year. %; The net profit attributable to the shareholders of the listed company was 522 billion yuan, an increase of 2.15%; the basic earnings per share was 0.55 yuan, a year-on-year decrease of 9.84%. The closing price of Guokewei on March 30 was 70.97 yuan, the total market value. 7.792 billion yuan.
As mainland investors have high enthusiasm for listed companies in the high-tech sector, IC companies listed on the A-share market have significantly higher fund-raising capacity. Using capital to promote the rapid development of the company has also become an important means of enterprise development in recent years. One. In recent years in the integrated circuit industry has formed a 'listing financing => expansion of the scale of the field or acquisition of related companies => refinancing => continue to expand the scale of the field or the acquisition of related companies ...'''s development model, A share market integration Circuit companies can thus maintain a high price-earnings ratio and market value.
Hong Kong stocks that pay more attention to actual business performance are hardly able to achieve this effect. Everyone is really evaluating the value of a company by taking profit and dividends per share. Therefore, compared to the stocks of the semiconductor industry that are in full swing in the A-share market, There is not much opportunity for the Hong Kong stock market for mainland chip companies. It is still very difficult to judge whether this is worth the price because each market has its own characteristics. Only listed companies that meet their market preferences will have more opportunities. Industry-related, but more important is the company's operating conditions, Hong Kong stocks on Tencent and AAC Technology's share price and market value are high, a company engaged in the Internet, a acoustic device, indicating that it still needs a stable performance growth.
Most of them underperformed the Hong Kong stock market. What does this mean?
In the past 52 weeks, only Shanghai Hua Hong has outperformed the Hang Seng Index with a relative increase of 22.16%. Of course, the worst CLP Huada Science and Technology achievements are staggering. The closing price on March 29 has increased relative to the Hang Seng Index in the past 52 weeks. At -40.70%, the closing prices of SMIC and Shanghai Fudan did not traverse the Hang Seng Index, the Hong Kong stock market, in the past year. This coincides with the newly listed semiconductor stocks in the A-share market or the semiconductor stocks that are currently under capital operation. Even pulling a dozen or even dozens of daily limit plates has made a difference.
This, of course, cannot lead to a clear conclusion that there is no opportunity for Hong Kong stocks to be talked about. Especially when mainland investors can invest in Hong Kong stocks through Hong Kong stocks, the aforementioned market growth of Tencent and AAC Technologies in recent years can also explain Question. We look at the Hang Seng Index’s gains from the beginning of last year to the Spring Festival this year. We know that Hong Kong stocks outperformed A-shares last year, thanks to measures such as the Shenzhen-Hong Kong Stock Exchange’s Shenzhen-Hong Kong Stock Connect introduced by the country, which was a relative price in the past. The lower mainland blue chip stocks soared and led the Hang Seng Index to soar; SMIC and Hua Hong Semiconductor all benefited from it. However, the entry conditions established to prevent Laoqian shares also limited CLP Technology. And Shanghai Fudan, both of the final design companies were not shortlisted for the Shenzhen-Hong Kong Stock Exchange and could not be supported by funds from the south of the Mainland.
Hong Kong Stock Connect, which includes Shanghai Stock Connect and Shenzhen-Hong Kong Stock Connect, means that qualified investors in Hong Kong and Mainland exchanges can purchase the relevant stocks listed on the other exchange. This is the main channel for mainland investors to invest in Hong Kong stocks. The Shanghai-Hong Kong Stock Connect opened earlier. The target stocks are mostly blue-chip stocks. The Shenzhen-Hong Kong General Communications Commission, which opened on December 15, 2016, pays more attention to technology stocks. Before the opening of Shenzhen-Hong Kong Stock Connect, all of us played a role in Shenzhen-Hong Kong Stock Connect's ability to balance the valuation gaps between Hong Kong and mainland technology stocks and earnings ratios. However, after the opening, it is actually required that the Hong Kong stock company must be a constituent stock of Hang Seng Index, and the average market value in the first half of the evaluation period should not be less than HK$5 billion.
This kind of requirement is in fact a very stringent requirement. As a result, a large number of mainland listed small and medium-sized technology listed companies, including China Power Huada Technology and Shanghai Fudan, could not be shortlisted. Instead, they were sold off in 17 years. Entering Hong Kong Stock Connect, various companies have made many preparations. For example, on January 8, 2014, Fudan Microelectronics was successfully transferred from the Hong Kong Growth Enterprise Market to the Main Board Market and was conducted under the new stock code '1385' and the new name 'Shanghai Fudan University'. The transaction, on the one hand, is to make it bigger and stronger, and on the other hand, there is a greater chance that the main board will enter Hong Kong stocks.
Another example is that in 2016, the stock abbreviation of China Power Huada Technology was still called China Electronics (the stock code was still 00085.HK, and the ultimate controller was China Electronics and Information Industry Group (CEC)). The integration of related assets in Shanghai established Huada Semiconductor and changed its name to its current name. 00085 has been a constituent stock of Hang Seng's S&T technology stocks and has a condition for entering Shenzhen-Hong Kong Stock Connect. However, because the average market value is not up to the mark, it cannot be selected as a SZ-HK Connect listing. The company's market value has long been within the range of HK$2,300 to HK$3 billion. To qualify for Shenzhen-Hong Kong Stock Connect, qualified domestic investors who are short-listed in the Mainland can purchase the list of Hong Kong stocks. The market value of CLP Tech China needs to be doubled and adjusted on the Shenzhen-Hong Kong Stock Connect list. Pre-maintenance for half a year.
However, there was also a brilliant moment for China Electronics in 15 years. It was once involved in the bid for the American chip company Atmel, which was funded by the Blackstone Group's Senrigan Fund. The stock price rose rapidly from approximately HK$1.8 to more than HK$4.8. However, due to the acquisition failure and performance The decline*, coupled with a series of subsequent reasons for the devaluation of the renminbi (which caused multiple A-shares blows and a sharp drop in technology stocks) caused the stock market crash in Hong Kong and the failure to enter Shenzhen-Hong Kong Stock Connect, etc., 000085.HK The Hong Kong-listed company, which holds the earliest IC design company in China, has entered a long bearish path since then, the lowest price has dropped to around 1 Hong Kong dollar, and it is still hovering at this low level.
to sum up
Although the price-to-earnings ratio and market capitalization of Mainland IC companies listed on the Hong Kong stock market is far lower than that of mainland counterparts listed on the A-share market, there may be opportunities for arbitrage between them, if CEC Huada Technology (00085.HK) achieves improvement in performance or commences mergers and acquisitions. The stock price and market value will increase to achieve the Shenzhen-Hong Kong Stock Connect standard and Mainland investors may purchase the list of Hong Kong stocks. However, because everyone is not familiar with the Hong Kong stock market, experienced professional investors may be more suitable for investing in these Hong Kong-listed IC companies. Stocks, individual investors who do not have much experience need to be highly cautious.
*Note: The profit of Chinapower Huada Technology (00085.HK) in 2016 was a record of HK$1.062 billion, which seems to have increased significantly compared to 2015, but the 'slippage' stated here refers to 2016. The main business of the year is integrated circuit design and sales profit. In 2016, the profit source of China Power Huada Technology was a one-time gain of HK$621 million from the Group’s confirmation of the sale of CEC Technology and the subscription of the shares of New China Opto-Optical Valley (00798.HK). In 2016, the Group confirmed one-time book income (negative goodwill) of HK$409 million arising from the acquisition of a 31.88% equity interest in China Opto-Optical Valley. The total amount of these two accounting profits is close to the year's profit, plus 16 years. More than 90 million government subsidies were obtained, which shows that its IC business was actually losing money in that year.
Therefore, the 'performance decline' in the article refers to the loss of the main business of China Power Huada Technology in 2016, instead of the profit of HK$221 million in the 2017 performance announcement, which is in comparison with the HK$1,062 million in the previous year. The profit has dropped by nearly 80%. Specific data and analysis, please go to all Internet cafes to read the CLP Technology (00085.HK) Annual Report.