2021-11-03 Zheng Zhenxiang, Chen Yongliang and she Lingxing of Guosheng Securities Co., Ltd. studied and issued a research report entitled "orders continue to be full and domestic alternatives are strong". This report gives a buy rating to Xinyuan Wei. the current share price is 194.83 yuan.

Core Source Micro (688037)
The company released its third quarterly report for 2021. In the first three quarters of 2021, the company achieved revenue of 547 million, an increase of 158.20% over the same period last year, and a net profit of 53 million, an increase of 18.80% over the same period last year. During the reporting period, semiconductor equipment maintained a high demeanor, the company increased its market development efforts, and orders on hand are still abundant. 2021Q3's single-quarter revenue was 196 million, up 31.32% from the same period last year. At the end of the reporting period, the company had an inventory of 850 million, and the company actively prepared raw materials, products in process, etc., to cope with the fast-growing demand. In addition, the company's contract liabilities increased to 288 million, and the accounts received in advance further increased.
The company is full of orders, and the new plant expects 2021Q4 to be partially put into production. At present, the company is full of orders on hand, the existing plant is running at full capacity, and the first phase of the industrialization of high-end wafer processing equipment is expected to be partially put into production, when the company's production capacity will be effectively expanded. The second phase of the production expansion project and the future Shanghai port project will continue to develop and expand production, including immersion ArF, front I-line and KrF photolithography coating developer, front Barc coating machine and back advanced packaging Bumping preparation process coating developer, etc., in order to meet the needs of rapid growth of business scale.
The previous equipment continues to pass the verification and improvement of the client, and the company has high-quality customer resources. The company's front glue development equipment has successively won orders from many leading customers, such as Shanghai Huali, Yangtze River Storage, Wuhan Xinxin, SMIC Shaoxing, Xiamen Shilan Jike, Shanghai Jita, Zhuzhou CSR, Qingdao Xinen, SMIC Ningbo, Kunming BOE, and so on. The company's leading SpinScrubeer cleaning machine has passed the process verification in Semiconductor Manufacturing International Corporation, Shanghai Huali, Xiamen Shilan Jike and other customers, and obtained batch repeated orders from a number of domestic Fab manufacturers.
The products continue to iterate and benefit from the accelerated demand for domestic alternatives to semiconductor equipment. Tracking the main bidding data of domestic wafer factories, glue development and single-chip wet process equipment are mostly supplied by overseas leading manufacturers, especially in Japan. As domestic leading manufacturers in this field, Core Source Micro is in an accelerated import process. Taking SMIC Shaoxing bidding data as an example, in 2020, the core source micro-coated glue developer achieved a breakthrough of 0 in SMIC Shaoxing glue development equipment bidding, and the proportion of winning machines was directly increased to 23%. The bid-winning share of SMIC Shaoxing cleaning equipment increased from 10% in 2019 to 22.2% in 2020. With the substantial increase in capital expenditure of domestic wafer foundry, the company is expected to accelerate the process of localization of beneficiary equipment.
Glue-coated development of domestic leading manufacturers, huge growth potential, decisive. As the only leader in China that can provide middle and high-end glue development equipment, it continues to expand to the field of front equipment with higher technical difficulty, and there is a great potential for domestic substitution. The company's short-term back equipment, compound equipment, front equipment and physical cleaning equipment continue to volume, domestic alternative space is larger. It is estimated that the company's net profit from 2021 to 2023 is 0.84,1.43 and 183 million yuan respectively, maintaining the "buy" rating.
Risk hint: downstream demand is lower than expected and new market development is not as expected.

The stock has been rated by eight agencies in the last 90 days, including 6 buy ratings and 2 overweight ratings; the average institutional target price in the past 90 days is 313.84; according to the Securities Star valuation analysis tool, the good company has a rating of 3 stars, a good price rating of 1 star and a comprehensive valuation rating of 2 stars.