Step out and the world is right in front of you.
In recent years, many domestic enterprises have been mired in price wars and have had to open up new growth space and set off a new round of overseas boom.
In the first half of 2024, among the 5,348 listed companies, 2,812 disclosed their overseas revenue in the first half of the year, totaling 3.76 trillion yuan, a year-on-year increase of 9.99%.
What is the concept of 3.76 trillion? Close to the total market value of the entire liquor industry such as Kweichow Moutai, Wuliangye, and Luzhou Laojiao; 1.4 billion people across the country will share it, and each person can also share about 2,700 yuan.
However, although going overseas has become a prairie fire, the meaning for different enterprises is very different.
For photovoltaic companies, going overseas is a "life-saving straw". Because China's PV supply market is too big. In 2023, China will have an annual polysilicon production capacity of 1.43 million tons and a wafer production capacity of 622GW, both ranking first in the world. Production capacity is still expected to increase significantly in 2024.
In 2023, the domestic PV module production capacity will even exceed 80% of the world's, but the new installed capacity will only be 50% of the world's, and there is a serious mismatch between supply and demand.
Therefore, photovoltaic leaders such as LONGi Green Energy, Trina Solar, and JinkoSolar have deployed in overseas regions such as the Middle East to find a blue ocean in the desert.
For semiconductor chip companies, going overseas means more competitiveness enhancement.
In the first half of 2024, the overseas revenue of Wingtech Technology, USI, and Changdian Technology will all exceed 10 billion yuan, and the overseas revenue of Demingli, Beijing Junzheng, Changdian Technology, and GigaDevice will account for about 80%.
Among them, Wingtech Technology is one of the three giants of mobile phone ODM (design + production) foundry, and GigaDevice is the world's second largest memory chip company.
Beijing Junzheng's automotive memory chips are comparable to Samsung Electronics and Demingli's net profit growth rate of nearly 600% in the first half of 2024.
Changdian Technology is among the best in the industry in terms of both the amount and proportion of overseas revenue.
So, what are the advantages of JCET?
- Share advantage.
We know that the production of chips includes three links: chip design, wafer manufacturing, packaging and testing.
In the industry, there are separate design companies such as Haiguang Information and Montage Technology, and specialized wafer foundries such as SMIC and Huahong, and naturally there are also independent packaging and testing companies.
Changdian Technology is the first listed company in China to package and test, and now it has grown into a global chip packaging and testing manufacturer, with the largest market share in Chinese mainland and third in the world, second only to Amkor Technology and ASE Light.
In 2023, the company's market share will be 10.27%, surpassing that of domestic Tongfu Microelectronics, Huatian Technology, etc.
However, the current scale of Changdian Energy is not all due to endogenous growth, and epitaxial mergers and acquisitions are also greatly helped. For example, the company once won the world's fourth largest packaging manufacturer Xingke Jinpeng with the cooperation of large funds.
- Technological advantages.
In addition to the expansion of the company's scale, mergers and acquisitions can also directly obtain advanced technology.
In September 2024, JCET announced the acquisition of 80% of the equity of Shengdi Semiconductor for more than 2 billion yuan. Shengdi was formerly a subsidiary of Western Digital, which specializes in the packaging and testing of advanced storage products.
Previously, the company's packaging and testing technology has been relatively comprehensive, covering traditional packaging and advanced packaging, such as wafer-level packaging, 2.5D/3D packaging, system-in-package, etc.
Chip products can be widely used in communications, mobile terminals, high-performance computing, automotive electronics, big data storage, Internet of Things and other fields.
Especially in the field of high-performance computing, that is, AI, the company can meet the requirements of customers' main packaging types, and has sufficient production capacity, short delivery time, and a yield rate of more than 99.9%.
This acquisition shows that the company will further improve the storage packaging and testing technology, and at the same time, the cooperation with the memory chip leader Western Digital will also be closer.
- Customer Benefits.
In terms of customer resources, JCET is also rich and high-quality. At present, 85% of the world's top 20 semiconductor companies have reached cooperative relations with the company, including SMIC, Huawei HiSilicon, Apple, etc.
So next, what are the highlights of Changdian Technology?
First of all, semiconductor destocking is complete.
The semiconductor industry is basically a cycle of 3-4 years, and the last round will basically end in the second half of 2023.
The performance of the packaging and testing plant is highly consistent with the industry cycle, and it is more sensitive than that of upstream semiconductor materials and equipment companies. In 2023, due to the downward cycle of the semiconductor industry, JCET's revenue and net profit will decline significantly.
With the recovery of the industry, the performance of JCET will improve simultaneously in the first half of 2024, achieving revenue of 15.49 billion yuan, a year-on-year increase of 27.22%, and a net profit of 619 million yuan, a year-on-year increase of 24.96%.
Second, downstream demand is strong.
Destocking mainly reflects the situation on the supply side, and we will focus on the demand side below.
The core driver on the demand side is AI.
On the one hand, the demand for AI chips is strong, and advanced packaging is in short supply. TSMC's CoWoS technology and HBM (High Bandwidth Memory) are both typical examples of advanced packaging.
Nvidia, AMD, and other AI chips all use TSMC's advanced packaging solutions, and Samsung Electronics, SK hynix, and Micron Technology's HBM production capacity in 2025 is also saturated.
It is estimated that the global advanced packaging market is expected to grow from $44.3 billion in 2022 to $80 billion by 2028.
JCET's advanced packaging technology is becoming more and more mature, and the company's chiplet high-density multi-dimensional process is expected to benefit from stable mass production in 2023.
On the other hand, AI has also derived the application of smart cars, AI mobile phones, AIPC and other applications in consumer electronics. At present, driverless cars and AI mobile phones are in a stage of rapid growth.
In 2023, the company will establish an automotive chip packaging and testing base and sign an agreement with CATL. And consumer electronics is the company's second largest source of revenue, accounting for 27.2% of revenue in the first half of 2024, a year-on-year increase of more than 30%.
Finally, let's take a look at the company's order situation.
The company did not disclose the specific order amount, but the contract liability is the amount of the contract deposit, which can reflect the order situation to a certain extent.
In the first half of 2024, the company's contract liabilities rose to 260 million yuan, which was less than the historical peak of 458 million yuan in 2021, but far exceeded other years, which shows that the company's order volume has increased and the performance certainty is strong.
In short, Changdian Technology is not lacking in competitiveness, and now the semiconductor industry is picking up and the downstream demand is high, the company has sufficient orders and full performance flexibility.
As of June 2024, the company has attracted 767 institutional holdings, of which large funds hold more than 8 billion yuan (October 6, 2024).
The above is only for the analysis of listed companies and does not constitute specific investment advice.
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Source: Flying Whale Investment Research