Northern Huachuang (002371): Continued High Growth Performance Further Strengthens Semiconductor Attributes

The report reading company announced the 2018 annual report with operating income of 33.

2.4 billion, an increase of 49 in ten years.

53%, net profit attributable to mother 2.

3.4 billion, an annual increase of 86.

05%, and announced the first quarter of 2019 report, operating income 7.

0.8 billion, an increase of 30 in ten years.

51%, net profit attributable to mothers was 19.91 million, an annual increase of 29.

65%, in line with expectations.

Investment points The product structure has been optimized, and the attributes of semiconductor equipment have further strengthened the company’s electronic process equipment revenue in 201825.

21 ppm, an increase of 75 in ten years.

68%, gross margin is 34.

72%, an annual increase of 1.

52pct, electronic components income 7.

88 ppm, a 10-year increase3.

23%, gross margin is 49.

44%, an annual increase of 5.

72pct, the proportion of electronic process equipment revenue further increased to 75.

85%, the product structure is further changed, and the attributes of semiconductor equipment are prominent.

Gross profit margin for the first quarter of 2019 was 44.

9%, an increase of 3 per year.

0pct, we 杭州桑拿 judge that this is due to the further increase in the proportion of semiconductor equipment products with high gross profit margins. In the future, the structure of conversion products will be further optimized, the attributes of semiconductor equipment will be further enhanced, and the gross profit margin will be improved.

The profit growth rate is significantly higher than the income growth rate, and the profitability has further enhanced. The company’s selling expenses in 2018 were 16.

8.9 billion, an increase of 35 in ten years.

04%, the management cost is 5.

3.0 billion, an increase of 14 in ten years.

78%, which is substantially lower than the growth rate of operating income.

53%, while R & D expenses3.

5.1 billion, a decrease of 1 previously.

56%. On the whole, the growth rate of the three major expenses significantly exceeded the growth rate of revenue, and the company’s product scale effect began to manifest.

The total R & D budget for 2018 is 8.

7.3 billion, of which research and development capitalization was 5.

22 billion, with a capitalization ratio of 59.

78%, compared with a total R & D budget of 7 in 2017.

370,000 yuan, of which R & D investment is capitalized3.

8 billion, compared with the increase in capitalization of R & D investment in 20181.

4.2 billion, compared with 1 government subsidy in 2018.

7.1 billion, compared to 3.7% in 2017
8 billion, a decrease of 2.
09 billion, after excluding the impact, the profit increased by 0.

6.7 billion.

Good financial indicators indicate that the company is on a healthy growth track. In 2018, the company’s inventory was 30.

1.5 billion, an annual increase of 49.

1% was mainly due to the increase in orders for production and stocking. To meet the company’s downstream semiconductor customers and photovoltaic customers’ expansion needs, accounts receivable and bills.

3.4 billion, an increase of 14 in ten years.

19%, advance payment 0.

910,000 yuan, unchanged for ten years, accounts payable and bills15.

6.8 billion, a 47-year growth of 47.

51%, advance receipts 15.

6.4 billion, an increase of 38 in ten years.

52%, reflecting the company’s leading level in the semiconductor equipment industry, with continuous ability to collect money.

From 2019 to 2020, the company will continue to maintain the semiconductor and photovoltaic dual-wheel drive semiconductor terminals. The Yangtze River Storage 64P will be mass-produced. The company is ushered in an order burst period. Only one customer with a long-term deposit is expected to order 400 million, which is close to the total of all customers last year.In order to replace Huali, SMIC and 8-inch factory customer orders broke out. It is expected that the company’s IC-end equipment revenue growth in 2019 will be close to 100%, reaching 8 billion to 1 billion.

On the photovoltaic side, Longji’s production capacity plans for 2018-2020 are 28GW, 36GW, and 45GW, respectively. We estimate that it will bring about 2 billion new orders to the company’s single crystal furnace equipment; profit forecasts and estimates of the company’s revenue in 2019 and 2020In turn, it is 4.4 billion and 5.2 billion, with an annual increase of 32.

53%, 18.

64%, net profit attributable to mothers is 3 respectively.

700 million, 5.

6 billion, a 57-year growth of 57.

57%, 51.

48%, corresponding to PE of 68 and 45 respectively, maintaining the “overweight” level.

Risk warning: the company’s main customers’ process progress is less than expected; the company’s equipment research and development progress is less than expected; the domestic semiconductor industry investment is less than expected;