On 2021-11-21, Chen Yuzhe of Shanghai Securities Co., Ltd. conducted research on he Lin Weina and released the research report "layout of high-end probes cut into the front-end test to break overseas monopoly to achieve domestic substitution". The report gives a buy rating to he Lin Weina. the current share price is 111.45 yuan.

And Lin Weina (688661)
Event description:
The company announced today that it intends to issue shares to specific targets to raise no more than 700 million yuan for the company's new projects to expand production, including mass production of MEMS process wafer test probe research and development and substrate-level test probe research and development. The corresponding investment amount is 488 million yuan for wafer test probe, 140 million yuan for high-end substrate probe, and 139 million yuan for supplementary liquidity.
Core ideas:
The back-end test has a firm foothold, and the front-end test is ready to go. In the early stage, the company realized the rapid development of the back-end chip test probe mainly by entering NVIDIA Corp's supply chain. In the first three quarters of this year, the company achieved a total probe income of 126 million yuan, accounting for 45.05% of the main revenue. At present, the company in the back-end chip testing has become NVIDIA Corp, Italian and French, Yadno, Anli and other companies suppliers, the market position is gradually stable, the share is expected to achieve sustained and rapid improvement. If we successfully cut into the field of front-end wafer testing in the future, the company is expected to further achieve revenue growth through existing and new customers, break overseas monopoly and fill the gap in the domestic high-end wafer test probe market.
The global market for front-end test probe cards is expected to reach US $3 billion, and the company already has technical reserves and customer base. According to VLSIResearch, global sales of front-end test probe cards were $2.206 billion in 2020, up 19.94% from a year earlier, and are expected to reach $2.99 billion in 2026. At present, the company in micro precision chip test probe technology, QFN packaging chip test probe and base, high-speed GPU chip coaxial probe technology has reached the domestic leading level, some technical parameters have reached the international similar level, a high degree of customer recognition, has a better technical strength and customer base, the future is expected to accelerate infiltration to the front-end testing field.
The high-end substrate probe is expected to achieve domestic substitution, further opening up the growth space. With the increase of the wiring density of PCB, the distance between electrodes decreases, which leads to the smaller and smaller diameter of the probe used for testing. The high-end substrate probe has higher requirements, such as non-trace gold plating, accurate positioning and so on. Customized linear probe is expected to become the future development direction. At present, the high-end substrate probe is still monopolized by overseas enterprises. We believe that if the company achieves probe technology and customer breakthroughs in the field of high-end substrates in the future, it is expected to open up new growth space and contribute more incremental revenue and profits.
Investment advice:
Maintain a "buy" rating. We estimate that the net profit of the company from 2021 to 2023 is 1.25,1.81 and 231 million yuan respectively, and the corresponding EPS is 1.56,2.27 and 2.89 yuan respectively. The current stock price corresponds to the PE value of 71.48,49.19 and 38.52 times from 2021 to 2023, respectively. We are optimistic that the company's traditional MEMS parts will achieve steady growth, and the probe will achieve faster and higher growth on the revenue and profit side because of the increase in share and the development of new markets.
Risk Tips:
MEMS industry demand, semiconductor probe business, the company's capacity expansion is lower than expected.

The stock has been rated by three agencies in the last 90 days, including two buy ratings and one overweight rating; the average institutional target price in the past 90 days is 92.32; according to the Securities Star valuation analysis tool, the rating of the good company is 4 stars, the good price rating is 1 star, and the comprehensive valuation rating is 2.5 stars. (rating range: 1-5 stars, up to 5 stars)