L&K(603929) 长江证券·2024-08-06 00:31Investment Rating - The report assigns a "Buy" rating to the company, with a first-time coverage [4] Core Views - The company is a leader in the cleanroom engineering sector, with a strong presence in both domestic and international markets, particularly in Singapore [4] - The company benefits from the domestic semiconductor substitution wave and the ongoing semiconductor industry transfer to Southeast Asia, which opens up significant growth opportunities for the cleanroom industry [4] - The company has a strong competitive advantage in technology and customer relationships, which are key to its success in the high-end cleanroom market [4] Company Overview - The company is one of the earliest domestic players in large-scale semiconductor cleanroom engineering, with a focus on the semiconductor market in the electronics industry [4] - The company's largest shareholder is a Taiwanese enterprise with over 30 years of experience in cleanroom engineering, and the controlling shareholders hold 54 74% of the company's shares [4] - In 2023, the company achieved revenue of 3 201 billion yuan, a year-on-year increase of 5 33%, and net profit attributable to shareholders of 287 million yuan, with cleanroom system integration accounting for 94 31% of total revenue [4] Industry Trends - The domestic semiconductor industry is experiencing rapid growth due to policy support, with the "14th Five-Year Plan" aiming for a 70% self-sufficiency rate in chips by 2025 [4] - Singapore is increasing its investment in the semiconductor industry, with capital expenditure expected to exceed 10 billion USD in 2024, driven by the global semiconductor industry's shift towards Southeast Asia [4] - The cleanroom industry is expected to benefit from the growth of the semiconductor industry, with the domestic market size reaching 268 6 billion yuan in 2023, a year-on-year increase of 11 59% [78] Competitive Advantages - The company has a strong technological edge, with 92 valid patents as of 2023, far exceeding its peers [4] - The company offers EPCO (Engineering, Procurement, Construction, and Operation) services, providing a one-stop solution for cleanroom system integration, which enhances its value proposition [4] - The company has leveraged its parent company's customer relationships to secure major orders from leading semiconductor companies such as UMC and TSMC, particularly in the Singapore market [4] Financial Performance - The company's revenue and net profit have shown strong growth, with a CAGR of 14 39% and 29 73% respectively from 2019 to 2023 [59] - In 2023, the company's cleanroom system integration business accounted for 94 32% of total revenue, with a gross margin of 13 62% [63] - The company's overseas business, particularly in Singapore, has shown significant growth, with revenue from Singapore reaching 1 414 billion yuan in 2023, accounting for 44 17% of total revenue [65] Future Outlook - The company is expected to benefit from the continued growth of the domestic semiconductor industry and the expansion of its operations in Singapore, with projected net profits of 409 million yuan, 451 million yuan, and 508 million yuan for 2024-2026 [5] - The company's strong order backlog, including a major order from UMC in Singapore, is expected to support its revenue and profit growth in the coming years [68] Market Position - The company holds a 7 51% market share in the domestic semiconductor cleanroom engineering market, placing it in the first tier of the industry [4] - The company's market position is further strengthened by its strong customer relationships and technological capabilities, which have enabled it to secure high-value projects in both domestic and international markets [4]