KFMI(300666) 申万宏源·2024-11-15 06:57Investment Rating - The report initiates coverage on Jiangfeng Electronics with a "Buy" rating, citing strong growth potential in its semiconductor components business [2][4] - The target price is set at 96.65 RMB, implying a 24.5% upside from the current price [4][56] Core Views - Jiangfeng Electronics is a leading domestic player in wafer manufacturing metal sputtering targets and is rapidly expanding into the semiconductor components business [2] - The company's revenue CAGR from 2019 to 2023 was 33%, with net profit CAGR of 41% [2] - The semiconductor components business is expected to drive future growth, with revenue from this segment growing 95% in 2022 and 59% in 2023 [4] Business Segments Sputtering Targets - Jiangfeng Electronics holds an 18.6% global market share in sputtering targets, with 2023 revenue of 1.67 billion RMB [3] - The company has made breakthroughs in high-end copper-manganese targets, which are expected to improve gross margins [3] - The global sputtering target market is estimated at 12.5 billion USD in 2023, with China's market growing faster than the global average [45] Semiconductor Components - The semiconductor components business accounted for 24% of revenue in 1H24, up from 12% in 2021 [18] - Key products include Shower heads for CVD equipment and silicon electrodes for etching equipment, which are rapidly gaining market share [4][40] - The domestic semiconductor equipment components market is expected to grow significantly due to localization trends, with mechanical components having the largest market share [3] Financial Projections - Revenue is expected to grow from 3.3 billion RMB in 2024 to 5.01 billion RMB in 2026, with a CAGR of 22.6% [4][51] - Net profit is projected to increase from 364 million RMB in 2024 to 644 million RMB in 2026, with a CAGR of 33% [4][53] - Gross margins are expected to improve slightly, from 30.6% in 2024 to 31.6% in 2026, driven by higher-margin products [51] Industry Trends - The global semiconductor materials market is expected to grow from 66.7 billion USD in 2023 to over 88 billion USD by 2028 [43][44] - China's semiconductor equipment market is projected to exceed 30 billion USD in 2024, with etching and thin film deposition equipment accounting for the largest share [30][32] - Domestic wafer fab capacity expansion is expected to continue, with 12-inch wafer capacity growing 15% in 2024 and 14% in 2025 [32][33] Competitive Advantages - Jiangfeng Electronics has five core technologies in sputtering target production, including grain orientation control and high-purity metal purification [48][49] - The company's customer base is diversified, with the top five customers accounting for 34% of revenue in 2023 [49][50] - The company's expertise in metal processing from its target business is being leveraged to expand into semiconductor components [48]