Jacques Technology (002409) In-Depth Report: Independently Controllable Semiconductor Platform Platform Company
1. Phosphorous flame retardant started, and the semiconductor material company was successfully transformed, and the profit returned to the rising channel. The company was established in 1997. The traditional main business is the production and sales of organic phosphorus flame retardants.Beginning in 2016, the company adopted the “M & A + investment + integration” development model and actively transformed into the semiconductor-related materials and equipment industry. It successively acquired Huafei Electronics, Jiangsu UP Chemical, and Komet.Interest rates have increased significantly, and profits and profitability have returned to the rising channel.The company achieved operating income in the first three quarters of 201913.$ 6.2 billion, + 24% for the full year; net profit attributable to mothers1.$ 8.6 billion, + 99% per year.The company expects net profit attributable to mothers to be 2 in 2019.40-2.7 billion yuan, + 81% -103% for the whole year. 2. The domestic semiconductor industry chain started late and has a low level of technology, but it is developing rapidly. There is huge room for replacement. The global semiconductor industry in 2018 was 468.8 billion US dollars, of which China reached 157.9 billion US dollars, accounting for 33.7%, the world’s largest market.From 2014 to 2018, China’s semiconductor components increased by 72.2%, with an average annual compound growth rate of 14.55%.Mainland China is undertaking the world’s third large-scale semiconductor industry transfer. From January to September 2019, the integrated circuit industry in developing countries reached 5049.10%, an increase of 13.2%.However, due to the late start, the overall technological level lags behind the international advanced level, especially the high technical barriers to semiconductor materials, and the self-sufficiency rate of most products is less than 30%. In particular, wafer manufacturing materials mainly rely on imports. China’s semiconductor material market is emerging in 201884.400 million US dollars, accounting for 16.3%, second only to Taiwan and South Korea, is the world’s third largest consumer market for semiconductor materials.The annual IC import volume in 2019 is 3055.500 million US dollars, is the largest import volume of goods, huge import substitution space. In order to support the development of the semiconductor industry, the State has established the National Integrated Circuit Industry Investment Fund (referred to as the large fund). The large-cap fund registered on October 22, 2019 has a registered capital of 2041.500 million yuan, an increase of 47% over the first phase.In 2019, a year ago, a major breakthrough was achieved in LOGIC, 北京夜网 DRAM and 3D NAND, the three major semiconductor manufacturing ends in the world.Big Fund Phase 1 holds company 5 since 2018.73% of the shares became the third largest shareholder, helping the company’s long-term development. 3. Create a “platform” company of semiconductor materials, fully benefiting from the semiconductor industry’s large-scale transfer and localization of the company’s layout of semiconductor core materials such as SOD, precursors, fluorine-containing gas, and silicon powder for packaging and testing, covering semiconductor film deposition, engravingCorrosion, cleaning, packaging and testing of semiconductor core interconnects, downstream customers include SK Hynix, Samsung Electronics, TSMC, SMIC, Yangtze River Storage and other world-renowned semiconductor manufacturers to quickly build a domestic semiconductor material “platform” company. (1) UP Chemical’s main products are SOD and precursor products used in shallow overlap isolation and thin film deposition steps, transforming research and development capabilities, and securing customers.The relevant market size of semiconductor precursor materials in 2019 is about 1.2 billion US dollars, and the composite stretch in the next five years is expected to be more than 10%. 3. Create a “platform” company for semiconductor materials, fully benefiting from the large-scale semiconductor industry transfer and localization. (2) Chemmet’s main cleaning and etching process is fluorine-containing special gas, which is domestic CF4 (2000 tons / year)., SF6 (8500 tons / year + planned to build 4,500 tons / year) leader, while planning to build 3500 tons / year NF3. (3) Huafei Electronics’ main business is the spherical silicon micro-powder for IC plastic packaging, which has grown into a domestic leader in spherical silicon micro-powder. (4) The company and South Korea Foures jointly established Jacques Furui to enter the field of gas transportation equipment; cooperated with South Korea Jaewon to arrange the field of wet electronic chemicals.We believe that the platform built by the company will further improve the layout of the semiconductor material industry chain. 4. Profit forecast and investment recommendations We estimate that the company’s net profit attributable to its parent in 2019-2021 will be 2.54/3.62/4.49 trillion, corresponding to EPS 0.55/0.78/0.97 yuan, PE64 / 45/36 times.With the global semiconductor industry’s transfer to China and the breakthrough of domestic manufacturing companies, it has provided conditions for the localization of upstream semiconductor materials and brought significant pulling effects.Consider the company to build a “platform” enterprise of semiconductor materials, master the core materials in multiple semiconductor industry fields, benefit from the semiconductor industry’s internal transfer, rapid industrial development and localization substitution, combined with industry variable levels, give 70 times PE in 2020, correspondingTarget price of 54.6 yuan, maintain “Buy” rating. Risk warning: less-than-expected capacity release; lower-than-expected downstream verification; product price fluctuations; intensified market competition.