Huatian Technology (002185) Company Review: Performance Recovery and Restructuring Industry Turning Point Validated
Event: The company issued a Q3 performance forecast, the net profit attributable to the mother in the first three quarters1.
78 ppm for the same period last year.
2.7 billion down 45.
72%; In Q3, the net profit attributable to the mother in the single quarter was 79-92 million yuan, 1 in the same period of the previous year.
17 percent 21.
43%, an increase of 14 from the previous quarter.
Comments: Q3 achieved the entire first half profit, and the performance is still recovering.
The company’s net profit attributable to its parent in Q3 was 79 million to 92 million yuan, and H1 was 85.61 million yuan. That is to say, the net profit achieved in the third quarter was comparable to the entire first half.
With the recovery of the industry, the company’s performance recovered significantly, an increase of 14 from the previous quarter.
43%, the year-on-year decline also obviously narrowed quarter by quarter.
Due to the high cost of acquiring Unisem and the financial costs of the borrowings used, the company’s Q3 net profit was lower than market expectations, but if these one-time effects were excluded, it was in line with market expectations.
The turning point of the industrial recovery has arrived, and the company’s Q4 performance is expected to continue to improve.
The development trend of advanced packaging is good, and new technologies need to be ramped up.
In terms of volume, the company’s wafer-level integrated circuit package volume growth in 2019H1 is considerable at 39.
40,000 pieces, an annual increase of 48.
31%; At the same time increase the target customer order and new customer development work, 55 new customers, 3 new Fan-Out packaging technology-based process development and mass production customers.
In terms of technology, the company completed the development of fan-out packaging technology for the first-level gallium chip in H1 in 2019, and is currently in the testing phase; TSV packaging products have passed high-end security reliability certification and entered the small-volume production stage, which needs to be released.
Successfully acquired Unisem and gained important European and American customer resources.
The company successfully acquired UNISEM, a world-renowned Malaysian semiconductor packaging and testing supplier.
UNISEM is a well-known Malaysian OSAT company with a wide range of customer sources. Its European and American market revenues exceed 60%. Its main partners, Broadcom, Qorvo, and Skyworks, are strong and can be said to be the world’s leading RF solution providers.
After Unisem joins Chinese companies, it is expected to further deepen the cooperation with customers in related markets. For example, most of Skyworks’ main customers ‘revenues flow into mainland China. After the merger and acquisition is completed, the synergy of upstream and downstream cooperation is expected to become more prominent, and the market prospect is broad.
Investment suggestion: Considering the severance pay incurred by Unisem’s factory closure in Indonesia in the third and fourth quarters, the EPS in 2019 will be changed from 0.
16 yuan down to 0.
11 yuan; taking into account the good trend of industrial recovery, maintain the company’s expectations for 2020-2021 EPS, respectively, are 0.
37 yuan / share.
Maintain “Buy” rating.
Risk Warning: Uncertainty in trade friction; industry recovery is less than expected; new technology landing / volume is less than expected