Silan Microelectronics is mainly engaged in the design, production and sales of integrated circuits and semiconductor microelectronics related products. It is an IDM company with design and manufacturing capabilities. The company's main products include integrated circuits, semiconductor discrete devices, and LED products. In the fields of computer, communication, and other electronic equipment manufacturing. With the support of the National Integrated Circuit Industry Fund and local governments, the company has set up a development plan for the 8-inch chip project, and fully promotes the development of special process development and manufacturing platforms.
In the first quarter of 2018, the company's operating income increased by 8.4% year-on-year, which was slightly slower than the previous year's performance. The reason was the weakening of the consumer electronics and home appliance industry and the impact of falling prices. We believe that the 2017 Q4 company's eight-inch line After mass production, the production ramp is in the key stage of tackling. The first quarter of the Spring Festival factor may cause the company's short-term performance growth to slow down. However, from the whole year, the company's downstream orders are in short supply, and high-end production capacity continues to expand. The growth trend remains unchanged.
Power devices global extension + price increase, eight-inch line to grasp the industry's lifeline
OEM production capacity is tight + downstream demand is strong, global power device delivery delay price increase is still continuing. Since 2017, due to the dual impact of rising downstream demand and eight-inch wafer foundry capacity shortage, global power device supply is tight. 2018 Since the beginning of the year, MOSFET, IGBT and other power devices are in short supply, and the delivery trend has been extended. Some devices are even out of stock. According to the 2018 Q2 component market report, the delivery of international power device manufacturers, Supply tensions have become a common phenomenon. We judge that the long-term trend of rising prices of various power device modules is still not over.
Chip supply is still dominated by imports, and domestic substitution is urgently needed. The chip market is dominated by foreign manufacturers and is even monopolized in some high-end semiconductor design and manufacturing. China imports a large number of chips every year, and domestic substitution is imminent. There are huge demand for controllable. At present, domestic semiconductor companies mainly focus on the packaging and testing, and the design of the segmentation field. The disadvantages in the mainstream chip field are very obvious. At the same time, domestic semiconductors lack IDM enterprises, which are domestically produced. The autonomous control and long-term development of the chip is a huge obstacle.
Scarce domestic semiconductor IDM, chip localization core strength
The company is a leading chip manufacturing company in China. With the increasingly fierce competition in semiconductor products, the threshold for semiconductor manufacturing is higher. As a company of IDM model, Silan micro design has its own uniqueness. After continuous trial and error and iteration, technology development has adopted a faster iteration speed to gain advantages. The company invested 4 billion yuan in chip manufacturing and invested 800 million yuan in packaging. To increase the scale effect of products, technically Continuous innovation and breakthrough, while reducing the company's production costs. In order to strengthen the ability to integrate multiple technology lines, strengthen the ability to launch products to enhance the company's value.
5-inch and 6-inch process leading, IGBT enters high-end customers. At present, Silan's integrated production capacity ranks fifth among global 5-6-inch chip manufacturers. In 2016, among the manufacturers below 6 inches, the company's market share is 5%. As the only domestic A-share listed company with eight-inch line capacity, it is close to the world's IDM company's technical hardware platform. At present, Silan Micro is one of the largest IGBT suppliers in China, and has developed multiple pieces. Product line, technology includes high-voltage integrated circuit technology. In recent years, the product has entered high-end, entered the international big-brand supplier, and became one of the few companies in China to enter the high-end white power module.
The 8-inch line was officially put into production, and the production capacity continued to expand. The company started to build an 8-inch chip production line in 2015. The production line invested more than 1 billion yuan. It was put into trial production in the first half of 2017. The overall situation is good. The future eight-inch line will continue to expand production. The production of the 8-inch line greatly eased the company's lack of capacity on the 5-inch and 6-inch. The 8-inch chip production line is technically close to the company's distance from major international competitors. Level, expanding downstream customer channels, and improving customer levels are all important.
The company's performance has been continuously released, and the scale advantage has become more apparent.
Since the company's listing, the scale of revenue has gradually increased. It is expected that the growth rate will accelerate in 2016-2019. The net profit of the mother will rise rapidly after the construction of the 8-inch chip production line in 2015. The company's operating gross profit margin has increased significantly, mainly The company's R&D and manufacturing integrated business has developed rapidly and maintained a strong growth momentum. The company's inventory turnover rate has steadily increased, indicating excellent operational capability.
The company's return on net assets has steadily increased since 2015. With the gradual release of chip production capacity, the product structure has been further optimized, and profits have also been raised. The company's ROE has reached 14% in 2017. The company's business profit margin is relatively stable and is expected to continue to improve in the future. .
Give the company 'overweight' rating. We are optimistic about the company's long-term development, estimated net profit in 18/19 is 2.74/374 million yuan, corresponding to EPS0.21/0.29 yuan / share, corresponding to PE61X/45X, given medium and long term ' Overweight' rating.