North Huachuang is a strategic restructuring of Qixing Electronics and North Microelectronics. It is the leading semiconductor equipment company. The company's main businesses include semiconductor equipment, vacuum equipment, new energy lithium battery equipment and precision components. The company has completed major operations since 2016. After the reorganization of assets, the business performance increased significantly. In 2017, the company’s revenue was 2.223 billion yuan, an increase of 37.01% year-on-year. The net profit attributable to the mother was 126 million yuan, a year-on-year increase of 35.21%. In 2017, semiconductor equipment business revenue accounted for 50% of total revenue. The above; business revenue of electronic components accounted for 35% of total revenue. The company's 2017 advance receipts increased by 180% year-on-year, and inventory increased by 72.58% year-on-year, indicating that the company has sufficient orders in hand and the future performance growth is guaranteed.
Semiconductor Equipment: Import substitution, riding on the wind
Mainland China is the third largest semiconductor equipment market in the world, but domestic semiconductor equipment self-sufficiency rate is less than 15%, and there is huge space for import substitution. The company's semiconductor equipment involves integrated circuits, advanced packaging, LED, MEMS, power electronics, flat panel displays, photovoltaic cells, etc. Semiconductor related fields. At present, the company's Etch, PVD, single chip annealing equipment, vertical furnaces, washing machines, etc., a number of 12-inch key integrated circuit equipment to achieve the application in the domestic leading OEM companies and leading storage companies, 8 Inch equipment also fully enters the domestic mainstream foundry and IDM companies.
Other Businesses: Keeping pace with others and stabilizing development
The company's vacuum equipment, lithium battery equipment and precision components business go hand in hand and develop steadily. Vacuum equipment: PV single crystal furnace provides the majority of capacity supply for Xi'an Longji. Lithium equipment: Currently, the company has more than 95% of lithium ions in the country. Battery Research Institute, manufacturing companies provide battery manufacturing equipment. Precision Components: The company continues to develop new products through independent innovation, with excellent performance to obtain the trust of customers from all walks of life, and continuously realize import substitution.
Valuation and rating
We expect the company's EPS to be 0.57, 0.91, 1.40 yuan from 2018 to 2020, and the current stock price will correspond to PE of 77, 49, 32 times. Taking into account that the company, as the leading semiconductor equipment company in China, has a rare stock of A shares, it has always enjoyed a valuation premium; There is ample space for import substitution, and there is sufficient growth momentum in the future. We give the company a valuation of 1.22x PEG in 2018, with a 6-month target price of 50.16 yuan, covering for the first time and giving a 'buy' rating.