Recently, it coincides with the second anniversary of the launch of the Science and Technology Innovation Board, and the semiconductor sector, which has strong scientific and technological innovation attributes, has repeatedly strengthened and attracted great attention from the market. Soon, this sector will receive another scarce target in a high-development track. In June, Gekewei, the leader in CMOS image sensor (“CIS”) chips, received approval from the China Securities Regulatory Commission for IPO registration on the Science and Technology Innovation Board. On August 4, the company will conduct preliminary inquiry work, and the date of official listing on the Science and Technology Innovation Board is not far away. Is Gekewei worth paying attention to?
1. A stone from another mountain: High-growth assets have outstanding performance
Review of the Science and Technology Innovation Board. Since its opening, the Science and Technology Innovation Board has always maintained a high degree of prosperity - especially the listing performance of leading stocks in scarce tracks and high-growth stocks. Bright. After the launch of the Science and Technology Innovation Board, the average initial PE of all stocks was 60.45 times, while the closing price on the day of listing corresponded to a PE of 102.02 times, nearly doubling; the main board only rose from 23 times the initial launch to an average of 49.51 times on the opening day, and the GEM After the registration system reform, the average initial PE increased from 30.78 times to 76.48 times the closing price on the first day of listing.
The Science and Technology Innovation Board has a high valuation "tolerance", mainly due to its growth. The average performance growth rates of the Science and Technology Innovation Board and Science and Technology Innovation 50 from 2019Q3 to 2021Q1 were 62.2% and 48.6% respectively, much higher than other major sectors; under the impact of the epidemic in 2020Q1, when most sectors experienced negative growth, the Science and Technology Innovation Board not only continued to maintain positive growth The growth rate can even be maintained at around 20%. Since then, the global market has continued to recover, with the Science and Technology Innovation Board leading the way. In 2021Q1, the performance of the Science and Technology Innovation Board reached 65.4% year-on-year, continuing to far exceed the average performance of A-shares of 30.6%; among which the electronics industry, especially the semiconductor sector, showed more significant high-growth characteristics.
Stones from other mountains can be used to attack jade. We often compare the Science and Technology Innovation Board to China’s Nasdaq. Judging from historical experience, in the field of "hard technology", China and the United States have similar industrial core logic and capital market development trends. The author believes that the trajectory of U.S. “hard technology” investment has important reference value for the Chinese market.
In the long term, similar to the United States, as the trend of potential economic growth weakens and the importance of technology in driving economic development increases, the attractiveness of technology assets with high growth and high performance growth will continue to increase, and Become the mainstay of the economy. Over the past 40 years, the U.S. Nasdaq market has produced numerous outstanding stocks, and the sector has performed very well. The author believes that a similar return on investment is expected to reappear, and science and technology innovation enterprises, with their higher growth potential, will better withstand the impact of the economic downturn. In the future, the domestic Science and Technology Innovation Board is expected to continue to give birth to a number of dark horse companies.
In the current Science and Technology Innovation Board, the information technology industry accounts for nearly 50% of the market value, mainly including the semiconductor industry chain, computer software, communications Internet of Things and other digital economic sectors. The semiconductor industry chain covers high-quality upstream semiconductor companies from chip design (Mengchi Technology, etc.), wafer foundry (SMIC, etc.), materials (Shanghai Silicon Industry-U, etc.) to equipment (China Micro, etc.). It is worth noting that the semiconductor sector still lacks relevant targets in the CIS segmentation track.
CMOS image sensor chip is the core component of the camera, and the industry has been in high prosperity for a long time. In recent years, optical innovation has become the main theme of mobile phone innovation, and the CMOS image sensor market has been in a golden period of rapid growth for a long time. From 2015 to 2019, the global CMOS image sensor market grew from US$9.00 billion to US$16.54 billion, with an average annual compound growth rate of 12.94% over the five years.
In the A-share market, there is only one CIS-related target - Vail shares. Weir initially focused on the semiconductor design business and semiconductor distribution business of power discrete devices and power ICs. In 2018, Vail announced that it planned to acquire Hansoh Technology, and the acquisition was completed in 2019; the company also acquired CIS design company Sipico in the same year. After the acquisition was completed, the company announced that it had officially entered the CIS track, and the CIS business became the company's main source of performance. In less than four years from 2018 to 2021, Weir's share price has increased nearly tenfold.
Figure: Weill Stock Price Trend
Source: iFind
With the listing of Gekewei, the Science and Technology Innovation Board finally welcomed a leading manufacturer that can benchmark Weill Stock.Gekewei focuses on the design of CMOS image sensors and LCD driver chips. Compared with Weil, in addition to being on the same track, Gekewei also has an industry-leading position. According to Frost & Sullivan, from 2017 to 2020, Gekomicro's global market share increased from 18.3% to 29.7% (calculated in terms of shipments), becoming a major CMOS image sensor supplier in the global market.
2. The scarce global leader in CIS is a value growth stock
Compared with Weill shares, Gekewei has its own unique advantages. Although both are CIS scarce targets, Weil's CIS products account for 74% of total revenue, while Geke Micro's proportion is 91%. In addition, unlike Weil Co., Ltd.'s acquisition of the CIS business, Gekewei mainly relies on independent research and development, and through technological innovation and process accumulation, it has gradually grown into the world's first echelon player.
Entering the track through mergers and acquisitions of international leaders, and relying on independent research and development, are two paths with "the same goal" but "different paths".
Weir shares obviously belong to the former. Howe Technology was established in the United States in 1995. It was originally an American company with pure blood. In 2014, OmniVision Technology was acquired by a Chinese consortium. In 2016, it completed privatization and delisted from Nasdaq, and was later acquired by Weill. When OmniVision Technology was acquired, it was already at a mature stage in the company's life cycle. There are two main logics supporting its valuation growth: one is the premium of secondary market valuation (stocks) compared to the primary market (mergers and acquisitions), which is one-time; the other is industry demand and prosperity, which is long-term of.
But Gekewei is obviously different. During its 18 years of cultivating CIS chips, the company mainly relied on independent research and development to occupy the market and continued to lead innovation in the domestic CIS field. The company has established high technical barriers. As of the end of 2020, Gekewei has a total of 329 domestic authorized patents and a total of 14 overseas authorized patents. From the perspective of manufacturing process innovation, the company completed production with fewer mask layers and carried out optimized Pixel process innovation; in terms of circuit design, the company broke through the lower-cost three-layer metal design; in the back-end process, the company overcame It adopts the industry’s unique COM packaging technology and COF-Like innovative design.
Gekewei is undoubtedly the pioneer of domestic substitution. With its leading technology, Gekewei has gradually replaced similar foreign products and successfully entered the international advanced optical and display supply chain system. The company's products are widely used in many mainstream terminal brand products such as Samsung, Xiaomi, OPPO, vivo, Transsion, Nokia, Lenovo, HP, TCL, Xiaocai Tiancai, etc. The logic supporting its valuation is that in addition to the industry being in an upward boom cycle, what is more important is the substitution of domestic semiconductors. Judging from the experience of the technology industry, as Moore's Law gradually slows down large-scale semiconductor technology, it is the moment for Chinese semiconductor companies to overtake international giants. In addition, in recent years, the technology hardware industry, including domestic substitution, has continued to move eastward, and the ZTE and Huawei incidents have brought the domestic substitution of semiconductors to a climax. Independent innovation of semiconductors has become the consensus of the government and private supply chains, bringing historic opportunities to outstanding semiconductor companies.
And Gekewei itself is also in the enterprise life cycle of rapid growth. Geke Micro is expanding from cost-effective products to high-performance products, from secondary cameras to main cameras, and from Fabless mode to Fab-Lite mode. Relying on independent core technology, Gekewei is accelerating its entry into the high-end CIS market controlled by international giants. This listing is also an important step in the company's high-end layout. Geke Micro plans to invest 6.376 billion yuan of the raised funds in the research and development and industrialization of 12-inch CIS integrated circuit characteristic processes. It plans to achieve independent control of production steps through "self-built production lines and segmented processing" and launch high-end CIS The product is a domestically produced alternative to the flare gun. According to its prospectus, Gekomicro's 32 million pixel and above CMOS image sensors have entered the internal evaluation stage of engineering samples, and through the transition to Fab-Lite mode, Gekomicro can effectively improve the research and development of high-end CMOS image sensors. Efficiency and production capacity guarantees further ensure the feasibility of research and development and promotion of high-end products.For Geke Micro, the iteration speed of high-performance products may be very fast, and products with 64 million pixels and above are also worth looking forward to.
Compared with Haowei Technology, Geke Micro has shown more significant growth. From 2018 to 2020, the company's operating income increased from 2.193 billion yuan to 6.456 billion yuan, with an average annual compound growth rate of 71.56%; among them, the revenue of CIS products were 1.756 billion yuan, 3.194 billion yuan, and 5.864 billion yuan respectively, with an average The compound annual growth rate is as high as 82.74%. In contrast, OmniVision Technology's revenue growth rate was between 15% and 25% in the three years before it was acquired. This can also be seen from the performance of Weil Holdings. OmniVision Technology was consolidated in mid-to-late 2019, which resulted in Vail's revenue base in 2019 being lower than that in 2020. Despite this, Vail's operating income in 2020 increased by only 45.43% year-on-year, which was far from the previous year. Lower than the average growth rate of Gekewei. Gekewei’s performance is even more explosive.
Picture: Howe Technology’s income
Source: Guojin Securities Research Institute
Picture: Geke’s micro income
Source: Prospectus, compiled by Gelonghui
In the short and medium term, the structural tension in semiconductor production capacity is still difficult to solve, and the sector boom continues; in the long term, high-growth assets will perform better in the era of stock games. Gekewei has two characteristics: one is scarce core assets, and the other is deterministic high-growth assets. The company is expected to gain considerable development space from the dividends of the times.
