With its high issue price and high price-to-earnings ratio , Huahai Qingke has become the most watched new giant in the A-share semiconductor sector just two months after its listing. Highly bound to Yangtze River Storage, Hua Hong Semiconductor, SMIC and other related major customers, why is Huahai Qingke regarded as a new round of chip leader?
35 billion chip star, handed over its first financial report to the capital market.
According to the Kanji app, Huahai Qingke achieved operating income of 717 million yuan in the first half of 2022. The half-year performance was close to last year’s full-year revenue, and profits were also doubled. The company's statement on the reason for the growth is: "It has improved its CMP equipment production and delivery capabilities and actively expanded related business areas."
Looking back further, it seems that since 2019, Huahai Qingke has been growing at a rate of "doubling year by year", and almost all of its revenue is concentrated in the two giants Yangtze Storage and Huahong Semiconductor. The latter two The latter is also a related party of Huahai Qingke.
Why is Huahai Qingke, whose growth is highly dependent on related-party transactions, so valued by the market? Where are the unexpected highlights that were not explicitly mentioned in the financial report?
Order-based production "Hidden" revenue
In fact, Huahai Qingke's performance is "expected" just based on the interim report results.
's operating income in the first half of the year was 717 million yuan, a year-on-year increase of 144.27%; net profit was 186 million yuan, a year-on-year increase of 163.26%; non-net profit after deduction was 144 million yuan, a year-on-year increase of 315.9%. Previously, the company expected to achieve revenue of 680 million yuan to 750 million yuan, net profit of 170 million yuan to 195 million yuan, and non-net profit of 140 million yuan to 165 million yuan in the first half of this year.
Among them, the revenue in the second quarter was 369 million yuan, 111.180% year-on-year; the net profit was 94 million yuan, a year-on-year increase of 221.61%; the net profit after deduction was 66 million yuan, and the net revenue and profit continued to hit a new high growth rate "every quarter" . The bright spot of
exceeding expectations is hidden in the financial report-because it mainly adopts the order-based production model, this revenue may only reflect a small part of the order delivery amount.
According to the prospectus, since the Demo machine requires customized production, the company adopts a model that combines inventory production and order-based production, that is, pre-produces a part of the module for customers to conduct process verification, and then puts into order-based mass production after the order is formally signed.
Due to the difficulty of the process, this verification cycle may take several years. Since Huahai Qingke delivered its first equipment in 2018, it has gradually entered the order mass production period in 2021, and revenue will be released at an accelerated pace.
Huahai Qingke revealed that the amount of new orders signed in the first half of 2022 increased by 133% year-on-year to 2.019 billion yuan, more than tripling last year's total revenue of 805 million yuan.
html On August 8, the company further responded on the investor interactive platform that multiple machines have been used for parallel verification of different 14nm processes on the client side, and the progress is currently going smoothly. There are differences in the proportion of advance payment agreed upon in orders from different customers. The equipment industry usually charges 30% of advance payment when signing an order.Judging from the financial report data, Huahai Qingke's ending inventory reached 1.954 billion yuan, an increase of 32.4% from the end of last year, and contract liabilities reached 1.003 billion yuan, an increase of 28.75% from the end of last year. It also reflects that the company has full orders on hand and is accelerating production and delivery. .
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Picture source: Founder Securities Research Report
Even if it does not count new orders. As of the end of 2021, the company has shipped 69 units of CMP equipment that have not been accepted and settled, and has more than 70 orders on hand for unshipped products, which has far exceeded the company's total number of 67 units of equipment recognized as revenue from 2019 to 2021.
According to public data, the average selling price of Huahai Qingke's 12-inch CMP equipment is more than 10 million yuan per unit, reaching 19.4907 million yuan/unit in 2021. The sales volume of 8-inch CMP equipment in 2021 will be the same as in 2020, with the average price of one unit sold being 11.55 million yuan/unit. From this,
roughly estimates that its revenue "hidden" in the annual report to be realized is as high as 800 million, which is equivalent to only half of what was announced last year.
How China’s “related parties” List
Behind the billions of orders, the list of major customers is even more luxurious, and they are all related parties of Huahai Qingke.
From 2019 to 2021, the company’s top five customers accounted for 94.96%, 85.71% and 92.99% respectively.The top three customers, Yangtze Memory , Huahong Group, and SMIC, shipped 53, 30, and 37 300 series CMP equipment respectively, accounting for nearly 90% of the total deliveries.
In 2021, two major related customers, Yangtze Storage and Hua Hong Semiconductor, even contributed more than 80% of revenue.
Image source: Prospectus
Part of the reason is that Huahai Qingke is currently the only high-end semiconductor equipment manufacturer in China that has broken through the mass production and development of 12-inch CMP commercial models.
Industry insiders pointed out, “Theoretically, the proportion of related transactions has exceeded the 30% audit red line. However, due to the high concentration of various links in the chip industry, Huahai Tsingke, which has unique technology, is very difficult to replace domestically produced chips in the industry. It is difficult to avoid it, and it is inevitable for downstream customers to get together. "
On the other hand, the centralized fulfillment of order-based production will also lead to the "getting together" of large customers.
Huahai Qingke stated in the prospectus that because the company was still in the early stages of development during the reporting period, the number of customers and sales machines was small, resulting in a relatively high proportion of transaction amounts with Yangtze Storage and Huahong Group, and thus Resulting in a higher proportion of related sales.
company has a long history of cooperation with domestic mainstream wafer factories. The first CMP equipment was shipped to Yangtze Memory, Huahong Group, and SMIC in August 2015, January 2018, and July 2018 respectively. , as the above-mentioned customers have rapidly expanded production in recent years, the proportion of purchasing domestic equipment has increased, and the company has also received bulk orders.
Today, the company and the above three customers have completed acceptance confirmation of equipment that has passed process testing. The customer’s production capacity expansion plan is clear, and the number of CMP equipment sold to them in the future is expected to increase year by year.
In addition to the three giants that have reached mass production cooperation, Huahai Qingke's customers disclosed in the prospectus also include Dalian Intel, Changxin Storage , Xiamen Lianxin, Guangzhou Yuexin, Shanghai Jita, etc., and are expected to gain harvest in the next 3-5 years Mass production orders.
According to the company's revenue and Semi's disclosed market size data, the CMP equipment market size in mainland China in 2020 was US$430 million, accounting for about 3% of front-end equipment investment, while Huahai Qingke's CMP equipment market in mainland China from 2018 to 2020 The market share is approximately 1.05%/6.12%/12.64%, and we can expect an increase in market share in the future.
Sichuan can invest in A-share first child
It is reported that Huahai Tsingke was born out of Tsinghua University and is also regarded as one of the best assets in the hands of Tsinghua Holdings .
In March 2013, Huahai Qingke Co., Ltd. was established. The founding shareholders are Qingkong Venture Capital, Kangmao Yiran, Tianjin Finance Investment, Kehai Investment and Tianjin Kerong. Before the listing, Tsinghua University held 100% of the equity of Tsinghua Holdings, and actually controlled 30.06 million shares of Huahai Qingke, accounting for 37.5840% of the total share capital, and was the actual controller of the company.
At the same time, Huahai Qingke Director High School is also staffed by a number of Tsinghua University faculty and staff. The company's chairman Lu Xinchun is a professor and chief researcher of the Department of Mechanical Engineering of Tsinghua University, deputy general manager Wang Tongqing is an associate researcher of the Department of Mechanical Engineering of Tsinghua University, and deputy general manager Zhao Dewen is an associate researcher of the Department of Mechanical Engineering of Tsinghua University. The above three people went through the procedures for leaving their jobs to start a business at Tsinghua University in September 2020, but they did not leave their jobs.
Image source: Prospectus
However, on April 18 this year, Tsinghua University signed the "Supplementary Agreement on the Free Transfer of State-owned Property Rights" with the Sichuan Provincial State-owned Assets Supervision and Administration Commission and Sichuan Energy Investment . If the equity transfer and reorganization are completed without compensation, Sichuan Energy Investment will become the company's indirect controlling shareholder, and Sichuan State-owned Assets will become the company's actual controller. According to
data, Sichuan Energy Investment was established in February 2011 and is 100% owned by the Sichuan Provincial Government. It is the main investor in promoting energy infrastructure and other projects in Sichuan Province. Its business mainly involves the energy industry, HP Finance, tourism and health care, service trade, chemical sector and LED lighting. The group's total assets have exceeded 180 billion yuan. It currently has two listed companies, Sichuan Energy Investment Development Co., Ltd.
It is worth mentioning that among the 14 " Tsinghua series" listed platforms purchased by Sichuan state-owned assets, Huahai Qingke is one of the few high-quality companies with acceptable performance and market performance, and Sichuan Energy Investment maintains its support. The highest share ratio. After the equity transfer is completed, the company may become the first science and technology innovation board state-owned enterprise in Sichuan and become the main target of Sichuan Energy Investment's A shares.
In terms of other shareholders, in March 2020, Huahai Qingke completed the Pre-IPO round of financing. New shareholders include SDIC Fund, Tianjin Leading, CDB Science and Technology, Gimpo Guotong, and Gimpo Emerging , Zhejiang Venture Capital, Qingdao Minxin, Dacheng Huicai, Stony Brook Capital, SMIC Haihe , Shuimu Vision, Wuhan Jianxin, Sunac Leasing and Gimpo New Trend, etc. 14 institutions, "SMIC Series" is here time to enter.
In this IPO, the company’s issuance price was 136.66 yuan per share, and the corresponding price-to-earnings ratio was 127.90 times, far exceeding the industry average of about 30 times. Under the dual influence of high issue price and high price-to-earnings ratio, the amount of funds raised also greatly exceeded expectations. According to the prospectus, Huahai Qingke IPO planned to raise 1 billion yuan, and the actual total amount raised was 3.645 billion yuan, an excess of 2.5 billion yuan.
As of August 17, Huahai Qingke’s share price recorded 329 yuan, an increase of more than 100% from the IPO in early June, and its market value reached 35 billion yuan, ranking among the top 20-30 in the A-share semiconductor sector.
html In early July, Huahai Qingke was surveyed by 40 institutions. Within two months, a total of 16 institutions had covered it. Its average net profit in 2022 is expected to be 392 million yuan, a year-on-year increase of 97.85%. The target price has a maximum prediction of 325.00 yuan, a minimum prediction of 239.00 yuan, and an average of 296.33 yuan. The current price may have exceeded the prediction range.The market is very enthusiastic about orders that exceed expectations, and it seems that Huahai Qingke has been locked in as the new chip leader.
Huahai Qingke also reminded this: the company still has a certain gap with the two industry giants in terms of market share, historical accumulation, business scale, product richness and technical level. If the customer verification fails in the future, some modules customized by the relevant machines for their customers may also be at risk of impairment.
This article comes from Global Tiger Finance app
