Tiantong Stock (600330) Interim Review: Weak Electronic Material Demand Breaks Through High-End Equipment

Tiantong Stock (600330) Interim Review: Weak Electronic Material Demand Breaks Through High-End Equipment

2019H1 returns to mother net profit1.

1.5 billion, a decrease of 28 a year.

86%, lower than expected The company released the 2019 semi-annual report, and achieved revenue 11 in the reporting period.

81 ‰, a decrease of 4 per year.

52%; net profit attributable to mother 1.

1.5 billion, a decrease of 28 a year.

86%, lower than expected.

2019Q2 returns to the net profit of the mother 0.

US $ 3.3 billion, a year-on-year decrease of 59% and a chain decrease of 60%; mainly due to the decrease in demand for sapphire, the decrease in investment income, the increase in financial costs, research and development costs, and substitution due to the throughput of LED customers.

We are still optimistic about the company’s industrial layout and execution capabilities, adjusting the EPS in 19-21 to 0.

31/0/39/0.

46 yuan to maintain the “overweight” level.

  High-end equipment: AMOLED module binding and other equipment have made breakthroughs, with nearly 1 billion new orders.

6.9 billion, with a previous appreciation of 2.

85%; gross margin 32.

16%, an increase of 5 per year.

71 points.

During the reporting period, the company made substantial breakthroughs through the in-depth cooperation with domestic leading enterprises. The industrial application of wafer processing equipment and AMOLED module binding equipment achieved substantial breakthroughs. COF / COP, FOF / FOP binding equipment won important industry customer orders;Orders are saturated, the market share of photovoltaic single crystal equipment has increased, and semiconductor single crystal growth equipment has been delivered to customers.

In addition to the customers delivered during the reporting period, the special equipment business has accumulated nearly $ 1 billion in new orders.

  Crystal materials: Sapphire demand expansion competition is intensifying, and microcrystalline crystals have achieved mass production in 2019H1 company sapphire revenue1.

61 ppm, a decrease of 40 per year.

15%; gross profit margin 37.

46%, an increase of 0 a year.

52 points.

The decline in revenue was mainly due to the limited release of LED epitaxial customer throughput, smartphone cameras and fingerprint identification sapphire protection films showed differential growth, demand for ingots and substrates slowed, and market prices continued to decline.

However, with the development of new applications such as Mini-LED and Micro-LED, as well as rising demand from emerging countries such as Southeast Asia, the sapphire substrate market is expected to pick up.

Silicon carbide crystals have developed 4-6 inch LT and LN chips and supplied in batches, and have been recognized by domestic and foreign customers.

  Magnetic materials: Maintain overall stability and actively expand high-end magnetic materials such as automotive electronics and wireless charging. 2019H1 company’s soft magnetic industry revenue2.

67 trillion, 16.
.

04%; gross profit margin 22.

95%, a decrease of 1 per year.

09 points.

The decrease in revenue was mainly due to the decline in market demand due to the Sino-US trade friction, but emerging demand such as 5G communications and automotive electronics has improved.

During the reporting period, the company actively developed high-frequency, wide-temperature, low-energy performance materials, focusing on domestic and foreign first-line smartphones, new energy vehicle manufacturers, etc.

In addition, the transformation of automated production lines was strengthened. The first fully automatic production line of soft magnetic materials in China was launched in April.

Electronics revenue 3.

24 ppm, an increase of 21% per year.
  We are optimistic about the company’s business layout and maintain the “overweight” rating. In view of the decline in the demand for the electronic materials market, we have reduced the sapphire revenue growth rate for the year 19-21 to -35% / 5% -5% (original value 16% / 10% /7%), reducing the growth rate of magnetic materials to -15% / 5% / 3% (original value of 6% / 6% / 6%), it is estimated that revenue for the year 19-21 will be 28/31 / 3.4 billion 杭州夜网论坛 US dollars (formerlyValue of 33/36 / 410,000 yuan), net profit attributable to mother 3.
11/3.

88/4.

5.5 billion (previous value was 3.

68/4.

61/5.

3.3 billion).

The benchmark company’s 2019Wind unanimously expected an average PE of 34X. Considering that the company’s pan-semiconductor business has just started, we will give 26-28XPE based on the net profit of 19 years, and lower the target price to 8.

06-8.

68 yuan (previous value was 10.

36-11.

10 yuan), maintaining the “overweight” level.

  Risk warning: sapphire, magnetic material demand growth breakdown; high-end equipment customer testing is less than expected.