01
Semiconductor equipment, China Microelectronics Corporation
China Microelectronics Corporation is a scarce domestic semiconductor equipment leader, etching equipment and MOCVD equipment for the core business, revenue accounted for 57%/22%, while expanding other pan-semiconductor key equipment. Pan-semiconductor contains integrated circuits, LEDs, photovoltaic cells and other fields, similarity in the manufacturing process . One of the most complex integrated circuit manufacturing, need to complete hundreds of processing procedures, involving semiconductor equipment up to dozens of kinds.
Photolithography, etching, and thin film deposition equipment are the three most important types of equipment in the IC front-end process, and the value of the equipment accounted for about 25%/24%/21%, respectively. 2020 revenue scale of the world's top 10 semiconductor equipment manufacturers half of the layout of the etching equipment field, the top five vendors, Applied Materials, Pan-Lin Semiconductor, Tokyo Electron are etching equipment head manufacturers. Referring to the growth path of Pan-Lin Semiconductor, China Microelectronics will build a semiconductor equipment platform company in the future, and the organization expects China Microelectronics' revenue to grow at a compounded rate of 34% over the next three years. .
The global semiconductor equipment market in 2020 was about $92.41 billion, +18.4% year-on-year. The global and domestic semiconductor equipment market will continue to grow +13-15% and 20-30% YoY from 2021-2025. But the top 15 semiconductor equipment companies are European, U.S., Japanese and South Korean manufacturers, the Chinese mainland manufacturers in the global market accounted for only about 2% or so, the space for domestic substitution is larger . Among them
(1) the global etching equipment to dry etching equipment, the market is about 14 billion U.S. dollars, is expected to 2020 ~ 2024 compound annual growth rate of 5.8%. The etching equipment market is highly concentrated, and in 2019, Pan-Lin Semiconductor (52%), Tokyo Electron (20%), and Applied Materials (19%) are among the top three etching equipment. Sinomicro is the only domestic company with both CCP/ICP etching technology, with a product line covering all 65nm-5nm processes, and has already received batch orders. The company's products are cost-effective, for example, the company's dual reactor products compared to competitors can reduce the production cost and footprint of 30% -50%; Currently, the company's market share in the CCP etching global market share of about 3%, the ICP etching market share of less than 1%, the domestic substitution has been stepped into the fast lane . The company intends to increase capital to expand the etching equipment capacity of 630 cavities / year, 2026 production capacity will be 6 times higher than in 2021. Assuming that the new capacity in 2030 full capacity, expected 2030 company etching equipment revenue reached 7.752 billion yuan, 2020 ~ 2030 compound growth rate is expected to be 19.7%.
(2) 2020 global semiconductor thin film deposition equipment market size of about $ 17.2 billion, is expected to 2020 ~ 2025 compound growth rate of about 14.6%, of which MOCVD equipment market of about 840 million U.S. dollars, is expected to 2020 ~ 2025 compound growth rate of about 8.5% . The CVD equipment market is monopolized by overseas giants, and the market share of the top three in 2020 will reach 70%, of which the market share of the top three MOCVD equipment will be as high as 98%. Sinomicro's MOCVD market share is 16%. The company's MOCVD equipment business used to be mainly used in the lighting LED market . With the Mini LED penetration rate increasing, the agency estimates that in 2021~2024, Mini LED chips need to consume a total of 46.69, 190.3, 392.1, 694.2 million pieces of 4-inch chip, corresponding to the annual demand for MOCVD 23, 95, 196, 347 chambers.
02
Building Materials, Conch Cement
Domestic cement leader: Conch Cement in the first half of this year, revenue of 80.433 billion yuan, +8.68% year-on-year; mother net profit of 14.951 billion yuan, year-on-year -6.96%; mainly due to the sharp rise in coal prices, fuel costs increased significantly, resulting in Profit year-on-year decline. The first half of this year, the progress of special bond issuance only completed 30% of the year, the second half of the special bond issuance and infrastructure investment is expected to speed up. In September, the national cement market will enter the peak season, demand is expected to pick up.
In the long run, China's cement industry, although the demand for the top, but according to the foreign situation, in the demand for the top, cement demand will also be in the high platform to maintain a few years or even more than a decade before the slow decline, can be considered as the basic stability of cement demand. The homogeneity of cement is very strong, and the core competitiveness of enterprises lies in low cost. Conch Cement has the lowest production cost in the industry through its hard-to-imitate T-shaped development strategy. 2019 Conch Cement's ton cost of RMB 179/ton is much lower than that of the industry (RMB 208/ton). Conch cement production accounts for about 20% of the country, Future growth lies in:
(1) product high-end. The state has issued a policy to cancel the low-end cement of 32.5 grade. 2019 conch revenue, 42.5 grade cement accounted for 50%, 32.5 grade cement accounted for 13%, and the ton price of 42.5 grade cement is higher than that of 32.5 grade cement by about 30 yuan per ton. With the withdrawal of 32.5 grade cement, it is expected that the company's gross profit will be further increased.
(2) Aggregate scale growth.
(2) Aggregate scale growth. Aggregate is mainly used in combination with cement to mix concrete or mortar. Referring to the world's old cement companies, the sales volume of aggregate and cement in the mature stage is between 1:1 and 2:1. The company's 2019 cement clinker self-product sales volume of 323 million tons and aggregate sales volume of only 31.4 million tons is expected to have a sales volume of 350-600 million tons of space for the aggregate business. At the same time, conch planning planning 2020 aggregate capacity of 100 million tons, 2025 capacity target to reach 200-300 million tons.
(3) Overseas market expansion. At the end of 2019, Conch's overseas clinker production capacity of 10.943 million tons was put into operation, mainly concentrated in Southeast Asia, where the economic growth rate is faster. The company plans to reach 70 million tons of overseas capacity in 2025, with a revenue share of 15%-20%.
03
E-cigarettes, Simcoe International
Hong Kong electronic cigarette leader: Simcoe International in the first half of this year, revenue of 6.95 billion yuan, +79.2% year-on-year; adjusted net profit of 2.975 billion yuan, +127% year-on-year. In the long run, compared to traditional cigarettes, e-cigarettes and HNB (heating does not burn) have both a harm reduction effect and better meet smokers' addiction relief needs. As long as tobacco consumption exists in the long term, the general direction of smokers turning to e-cigarettes and HNB is certain. Institutions expect global sales of e-cigarettes and HNBs to reach $111.5 billion and $32.5 billion, respectively, in 2024, with a compound annual growth rate (CAGR) of 25% and 40% over the next five years. Historically, Smallsmoke has grown faster than the e-cigarette industry.
Smallsmart International is the world's leading foundry of electronic atomization devices, mainly producing the heating device (ceramic atomizer) that atomizes the tobacco oil, which is the equivalent of Intel in laptops in electronic cigarettes. With a high technological threshold for its ceramic atomizing cores, Smallsmore's market share in the atomized cigarette manufacturing segment was 16.5% in 2019, more than the combined market share of the 2nd-5th place. Taking the largest U.S. market for e-cigarettes as an example, e-cigarettes need to go through the Pre-Market Tobacco Application (PMTA) to be listed on the market, and the U.S. PMTA review costs companies a lot of time and money. Once the atomizer core and other important components are replaced, it will mean that the product as a whole needs to be re-examined and tested. Because customers will face the risk of reapplying for PMTA if they change suppliers, downstream customers usually don't change suppliers of atomizer cores, which gives Smallsmart strong bargaining power over the downstream and very strong profitability.
Simcoe's production capacity is not saturated, the actual output in 2019 compared to the design capacity is still 60% of the room for improvement; in addition, Jiangmen Phase I/Jiangmen Phase II/Shenzhen Industrial Park is expected to be put into operation in 2022-2024, the design capacity compared to the current will be further increased by 47%/111%/138% , the production capacity release will be The release of production capacity will drive the performance growth of Simor.