Beifang Huachuang (002371) Commentary on Major Events: Equity Incentive Plan Landing Orders Achieved Stable Growth

Beifang Huachuang (002371) Commentary on Major Events: Equity Incentive Plan Landing Orders Achieved Stable Growth

The company’s core competitiveness and industry status are significant. In 2019, the company plans to raise 重庆耍耍网 funds to lay out advanced process equipment research and development issues that have been approved by the CSRC to enhance long-term domestic competition in semiconductor equipment.

Semiconductor equipment companies are only scarce in the sector and are expected to benefit from deep policy support in the future. We are optimistic about its prospects for a long time.

We maintain the company’s EPS forecast for 2019/2020/2021 of 0.

85/1.

08/1.

38 yuan, target price of 81 yuan (corresponding to 75 times PE in 2020), maintaining the “overweight” level.

   The equity incentive plan was implemented, and the exercise price was determined.

On November 13, 2019, the company announced an equity incentive plan. It plans to grant a total of 9 million shares to incentive objects, including 4.5 million stock options and 4.5 重庆耍耍网 million gaining shares, accounting for the total share capital1.

97%.

360 reward objects were awarded, including 73 leaders and 287 core technical backbones, and 88 reward stock incentive objects were awarded, including 7 company executives, 81 subsidiary executives and business leaders.

The company’s incentive target is a compound growth rate of 25% in 2017 over the next three years and a revenue of US $ 6.4 billion by 2022, demonstrating confidence in future growth.

The budget exercise price is determined to be 69.

20 yuan / share.

   The company has sufficient orders in hand and expects stable revenue growth.

In 2019Q3, the company’s inventory is 35.

8.9 billion yuan, +24 per year / mo.

3% /-4.

14%, the largest proportion of IC equipment inventory products in inventory, mainly equipment in customer verification, reflecting the company’s continued stable order support in hand, is expected to resell in the future.

With the release of hand orders and order resale, we expect the company’s long-term performance to maintain steady growth.

   Technology research and development enhanced core business competitiveness, and the fundraising project layout of 5 / 7nm advanced process equipment was approved by the CSRC.

The company undertakes major national sub-projects in the world 02, leading the country in 12-inch 90-28nm process silicon etching machines and PVD, CVD equipment, cleaning machines, oxidation / diffusion furnaces. Currently, 14nm etching, LP, PVD, CVD, etc.The equipment already has customers such as SMIC.

On October 28, 2019, the company’s non-public issue was approved by the CSRC. The company plans to raise 20 billion yuan to promote the industrialization of integrated circuit equipment below 28nm, and simultaneously build a 5 / 7nm advanced process equipment test and verification platform to lay out the most advanced industry.Craft.
At the same time, the company participated in the capital increase of Beijing Integrated Circuit Equipment Innovation Center and cooperated in the development of integrated circuit equipment technology. It is expected that the company’s domestic competitiveness will be significantly enhanced in the long run.

   Risk factors: Lower-than-expected downstream demand; less-than-expected progress in equipment industrialization; less-than-expected technology research and development.

   Profit forecast, estimation and rating: As a semiconductor equipment company, the company is scarce in the sector, and future trends will benefit from policy support. We are optimistic about its prospects for a long time.

We maintain the company’s EPS forecast for 2019/2020/2021 of 0.

85/1.

08/1.

38 yuan, 75 times PE in 2020, target price of 81 yuan, maintain “overweight” rating.