Investment Rating - The report reiterates a "Buy" rating for Northern Huachuang (002371CH) with a target price of RMB 405 [1] Core Viewpoints - Northern Huachuang is expected to benefit from the expansion of downstream customers' capital expenditures and the trend of domestic substitution in China's semiconductor industry [1] - The establishment of China's National Integrated Circuit Industry Investment Fund Phase III (USD 47 5 billion) is expected to be favorable for Northern Huachuang [1] - The company is the preferred stock under the theme of semiconductor domestic substitution [1] Industry Analysis - Geopolitical risks are driving major economies to prioritize supply chain security and self-reliance over production efficiency [1] - China's National Integrated Circuit Industry Investment Fund Phase III has a registered capital of RMB 3 440 billion, the largest to date (Phase I/II were RMB 1 390 billion/RMB 2 000 billion respectively) [1] - The fund is expected to focus on chip manufacturing, semiconductor equipment, and materials, potentially extending to other critical areas such as AI [1] Company Performance and Outlook - Northern Huachuang's 2023 new orders amounted to RMB 30 billion, with over 70% from semiconductor equipment and 15% from new energy/photovoltaics [1] - These orders are expected to convert into revenue in 2024, with a projected revenue growth of approximately 40% for the year [1] - The company's gross margin forecasts for 2024 and 2025 have been raised by 1 9% and 3 9% respectively, due to increased contributions from advanced manufacturing equipment [1] - R&D expenditure forecasts have also been raised, offsetting the positive impact of gross margin improvements on net profit [1] - The target price of RMB 405 is based on a 2024 forecasted P/E ratio of 39x [1]
睿智投资|北方华创 (002371 CH) - 半导体产业链自主可控趋势下的主要受益者