Hwatsing Technology (688120) 申万宏源·2024-08-21 01:09Investment Rating - The report initiates coverage on Huahai Qingke with a "Buy" rating, predicting net profits of 1.009 billion, 1.303 billion, and 1.606 billion yuan for 2024-2026, with corresponding P/E ratios of 31x, 24x, and 19x, which are below the industry average [7][4] Core Views - Huahai Qingke has established a strong technical and market barrier in the CMP equipment sector, with its 12-inch CMP equipment achieving full domestic substitution for 14nm nodes and above, and a domestic market share of 35% in 2023 [4] - The semiconductor market recovery and increased CMP equipment usage due to process advancements present growth opportunities, with China's wafer fab capacity expected to reach 8.85 million and 10.10 million wafers per month in 2024 and 2025, respectively [4] - The company's platform strategy of "equipment + services" creates new profit growth points, with new equipment such as thinning, dicing, and cleaning devices sent to clients for verification by the end of 2023, and a combined market size of these new fields expected to be 2.1 times that of CMP equipment by 2030 [4] Company Overview - Huahai Qingke, originating from Tsinghua University, has been deeply involved in CMP technology for over a decade, achieving significant milestones such as the delivery of its 500th 12-inch CMP machine in July 2024 [19][20] - The company's revenue grew from 19 million yuan in 2017 to 2.508 billion yuan in 2023, with a CAGR of 125.3%, and net profit grew from 98 million yuan in 2020 to 724 million yuan in 2023, with a CAGR of 64.9% [26][4] - CMP equipment accounts for about 90% of the company's revenue, with orders remaining strong, and the company has expanded its product line to include thinning, dicing, and cleaning equipment, as well as wafer regeneration and maintenance services [30][20] Industry Analysis - The global semiconductor equipment market grew from 106.246 billion in 2023, with China's market growing from 36.597 billion in the same period, accounting for 34.4% of the global market in 2023 [53][54] - CMP equipment is a niche market, accounting for 2.5-3.2% of the global semiconductor equipment market, with a global market size of $3.04 billion in 2023 and a Chinese market size of 6.44 billion yuan, expected to grow to 9.319 billion yuan by 2025 [54][63] - The demand for CMP equipment increases with process advancements, with 12-inch wafer lines requiring 17.5 CMP machines per 10,000 wafers per month, compared to 3.7 for 8-inch lines [4][49] Competitive Landscape - The global CMP equipment market is dominated by Applied Materials and Ebara, with a combined market share of over 90%, especially in the most advanced processes below 14nm [65] - In China, Huahai Qingke and Jingyi Jingwei are the main domestic players, with Huahai Qingke achieving full substitution for 14nm and above processes and holding a 35% market share in China in 2023 [65][67] - Huahai Qingke's CMP equipment meets the production requirements for 14nm and above processes, but there is still a technical gap compared to international competitors for processes below 14nm [67]