Nowadays, if you want to say which car is the most popular, it must be Xiaomi Auto, and many people even say that the first batch of owners of Xiaomi Auto has earned back a BYD Qin with its super high popularity.
Xiaomi cars have powerful autonomous driving, intelligent cockpits, and in-vehicle systems, all of which are inseparable from the support of hardware, to put it more bluntly, the support of chips. Lei Jun also introduced at the press conference that Xiaomi cars use the hardware solutions of Nvidia and Qualcomm.
The chip, or semiconductor industry, can be divided into semiconductor support industry, wafer manufacturing industry, and semiconductor application industry according to the production process.
For example, the well-known SMIC, TSMC, Samsung, etc. are all leading enterprises in midstream semiconductor manufacturing, and there are more downstream application industries, such as Huawei, Xiaomi, and new energy vehicles, such as BYD and Geely.
In fact, the upstream semiconductor support industry is also very critical, especially the semiconductor equipment industry. But when it comes to semiconductor equipment, people may only know about lithography machines, in fact, thin film deposition equipment is also one of the core equipment, and even its value in the wafer manufacturing equipment accounts for more than lithography machines, second only to etching equipment.
The Tuojing technology we want to introduce today is the leader of domestic semiconductor thin film deposition equipment.
Thin film deposition equipment faucet
Tuojing Technology has been focusing on the research and development of thin film deposition equipment, the so-called thin film deposition is to deposit thin film materials on the substrate of silicon wafers, so that after layer by layer, the circuit structure is formed.
Among the thin film deposition equipment, the value of PECVD accounts for 33%, which is the largest equipment, and the value of ALD accounts for 11%, which accounts for half of the value of the entire thin film deposition equipment.
This half of the country is also the main product of Tuojing Technology, and in 2022, the company's PEVCD equipment revenue accounted for more than 90% at one time.
Tuojing Technology is also the only manufacturer of integrated circuit PECVD and SACVD equipment in China, breaking the foreign monopoly, and the product performance has reached the international leading level. At present, the company's products have been supplied to SMIC, Huahong Group, Yangtze River Storage, Changxin Storage and other domestic mainstream wafer factories, and compete with foreign oligarchs.
Revenue increased nearly sevenfold in three years, and net profit attributable to the parent company increased nearly tenfold in three years
As a leader in thin film deposition equipment, Tuojing Technology's performance is naturally not bad.
From 2019 to 2022, the company's revenue increased from 251 million yuan to 1.706 billion yuan, with a compound annual growth rate of 89.42%, an increase of nearly 7 times in three years.
According to the performance forecast, the company will achieve revenue of 2.705 billion yuan in 2023, a year-on-year increase of 58.60%, and the net profit attributable to the parent company will be 665 million yuan, a year-on-year increase of 80.38%. If you only look at 2021-2023, the compound annual growth rate of the company's revenue is 88.91%, and the compound annual growth rate of net profit attributable to the parent company has reached an astonishing 212.72%, an increase of nearly 10 times in three years.
Such rapid growth has also won the favor of institutions. As of December 31, 2023, the company has 652 institutional shares, and the National Fund and China Micro Corporation are also shareholders of the company.
Attaches great importance to R&D and product upgrades to attract high-quality customers
Tuojing Technology can achieve such rapid growth from high-quality products, and as a technology company, only by attaching great importance to research and development can we achieve continuous product change.
Judging from the data, although the R&D expense rate of Tuojing Technology has been declining in recent years, this is caused by the rapid growth of revenue scale. In addition, even if there is a downward trend, it is still much higher than that of its peers such as China Micro Corporation, Xinyuan Micro, Shengmei Shanghai, and Huahai Qingke.
In fact, from the background of the personnel, we can also see that Tuojing Technology attaches great importance to research and development.
Most of the company's executives are from professional backgrounds, and have worked in overseas leading companies such as Nuofa and Lam Research, and have rich industry experience. According to the 2023 semi-annual report, the company has 404 R&D personnel, accounting for 43.72% of the total. Among them, the number of people with master's degree or above accounted for 61.39%.
Higher than the R&D expense rate of peers, coupled with an experienced R&D team, Tuojing Technology has also made great achievements.
The company's core technologies such as thin film process equipment design have solved a series of key problems in semiconductor manufacturing, while ensuring the performance of thin films, increasing customers' production capacity and reducing production costs.
As a result, the company's products have been sought after by SMIC, Huahong Group, Yangtze River Storage, Xiamen Lianxin and other customers, and the product competitiveness continues to increase, and the company's revenue will naturally increase significantly.
The short-term equipment cycle is on the upside, and the long-term domestic substitution is promoted
Tuojing Technology is currently the leader of domestic thin film deposition equipment, and with the development of the semiconductor industry, its performance and market share are expected to reach a higher level.
In the short term, driven by technologies such as 5G, AI, and autonomous driving, wafer fabs are actively expanding production, and the capital expenditure of semiconductor equipment suppliers in mainland China has increased significantly. It is estimated that in 2025, the investment amount of domestic semiconductor manufacturers will reach 48.4 billion US dollars, of which 38.036 billion US dollars will be spent on equipment.
Among the manufacturers that have expanded production, there are many customers of Tuojing Technology such as SMIC, Huahong Group, Yandong Microelectronics, and Jinghe Integration, and the expansion of downstream manufacturers will inevitably drive the improvement of the company's orders.
This can also be seen in the contractual liabilities. Contract liabilities can be simply understood as undelivered orders, and these future revenues will support the company's performance. It can be seen that in the first three quarters of 2023, the amount of contract liabilities of Tuojing Technology is as high as 1.497 billion yuan, which has exceeded the level of the whole year of 2022 and is more than 11 times that of 2021.
In addition, according to the 2023 performance forecast, as of the end of 2023, the company's orders in hand exceeded 6.4 billion yuan, an increase of 39.07% year-on-year, and the orders are still very sufficient.
In the long run, the domestic substitution rate of the mainland semiconductor industry chain is low, which provides growth space for Tuojing Technology.
Although China is the world's largest market for semiconductor equipment, it relies heavily on imports for high-end equipment. The thin film deposition market is monopolized by Applied Materials, Lam Research Semiconductor, and TEL, and foreign manufacturers occupy more than half of the market share, with a localization rate of less than 20%.
If the localization rate of thin film deposition equipment can reach 20% in 2022, the market size of domestic manufacturers can reach 1.25 billion US dollars. If the localization rate is increased to 50%, in the face of the global market of 100 billion yuan, the market space of domestic manufacturers can reach more than 3 billion US dollars, and Tuojing Technology, as a domestic leader, will naturally fully enjoy this dividend.
epilogue
As a semiconductor equipment company, Tuojing Technology attaches great importance to R&D, builds a solid moat, achieves rapid growth in performance, and harvests customers such as SMIC, Huahong Group, and Yangtze River Storage. In the face of the thin film deposition equipment market with a low localization rate, the company still has a lot of room for growth, and is expected to reach a higher level in the future.
The above analysis does not constitute specific investment advice. The stock market is risky, and investors need to be cautious.
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