Open Source Securities: Give Huatian Technology a buy rating

2021-10-30Liu Xiang of Kaiyuan Securities Co., Ltd., Luotong conducted research on Huatian Technology and released a research report "Company Information Update Report: 2021Q3 Performance Increase, Sufficient Growth Momentum under the High Prosperity of the Industry", this report gives a buy rating to Huatian Technology, and the current stock price is 12.85 yuan.

Huatian Technology (002185)

The domestic sealed test leader, the performance of rapid growth, maintaining the "buy" rating

On October 28, 2021, the company released the third quarter report of 2021, and achieved revenue of 8.867 billion yuan in the first three quarters of 2021, a year-on-year increase of +49.85%; a net profit attributable to the mother of 1.028 billion yuan, a year-on-year increase of +129.78%; and a net profit of 819 million yuan, a year-on-year increase of +118.64%. Among them, the single quarter revenue of 2021Q3 was 3.249 billion yuan, +47.49% year-on-year, +7.53% month-on-month; the net profit attributable to the mother was 415 million yuan, +130.22% year-on-year, +25.53% month-on-month; the net profit deducted from non-attributable to the mother was 341 million yuan, +107.09% year-on-year, and +29.57% month-on-month. The downstream of semiconductors is highly prosperous, the company's current orders are full, the capacity utilization rate remains high, and at the same time actively expand production, the growth momentum is sufficient. We have raised our earnings forecast to expect the company to achieve a net profit attributable to the parent company of 14.87 (+0.85)/19.55 (+2.01)/22.71 (+2.29) billion yuan and EPS0.54 (+0.03)/0.71 (+0.07)/0.83 (+0.08) yuan for 2021-2023, respectively, and the current stock price corresponds to PE2.7/17.3/14.9 times, maintaining a "buy" rating.

The downstream is highly prosperous, the company's capacity utilization rate remains high, and the growth momentum is sufficient

Driven by favorable factors such as domestic substitution of integrated circuits, accelerated construction of 5G, and growth in demand for consumer electronics and automotive electronics, China's integrated circuit demand has maintained a high degree of prosperity and continued to maintain a stable growth trend. According to CSIA statistics, in 2021H1, the sales volume of China's integrated circuit industry was 410.29 billion yuan, +15.9% year-on-year, of which 116.47 billion yuan was sealed and tested, +7.6% year-on-year. The company's original three core plants in Tianshui, Xi'an, Kunshan are full of capacity utilization, the capacity of the new plant in Nanjing has climbed smoothly, the Malaysian plant area UNISEM has been less affected by the epidemic, and the growth of each plant area is better, driving profitability. On September 10, 2021, the company was approved by the CSRC to raise 5.1 billion yuan, of which 1.09 billion yuan was used for the integrated circuit multi-chip packaging expansion project, 1.03 billion yuan for the high-density system-level integrated circuit packaging and testing expansion project, 900 million yuan for the TSV and FC integrated circuit packaging and testing industrialization project, and 1.38 billion yuan for the storage and radio frequency integrated circuit packaging and testing industrialization project, which is conducive to the company's further improvement of profitability. Advanced packaging for the future development trend of the packaging industry, during the reporting period, the company further increased R & D investment, 2021Q3 R & D expenses of 500 million yuan, +55.79% year-on-year, the company's technical strength is expected to continue to enhance. The company's 2021Q3 contract liabilities were 150 million yuan, an increase of 111.44% year-on-year, mainly due to the increase in the pre-received packaging and testing payments of subsidiaries, showing that the company's orders in hand are full and the growth momentum is sufficient.

Risk warning: the risk of declining industry demand, the risk of intensified industry competition, and the expansion of production capacity is less than expected.

In the past 90 days, a total of 7 institutions have given ratings, 5 buy ratings and 2 overweight ratings; the average target price of institutions in the past 90 days has been 18.72; the Valuation Analysis Tool of Securities Star shows that Huatian Technology (002185) has a good company rating of 3 stars, a good price rating of 2 stars, and a comprehensive valuation rating of 2.5 stars.