2022-01-10 Oriental Securities Co., Ltd. Yi Jian, Ma Tianyi, Tang Quanxi conducted research and released a research report "Semiconductor Silicon Wafer leading Enterprise, Power + RF increase growth Kinetics". It is believed that its target price is 160.52 yuan, while the current stock price is 106.15 yuan, which is expected to rise by 51.22%.

Lionwei (605358)
Domestic large-size wafer leader, building power, compound semiconductor manufacturing platform: the company's main products are semiconductor wafers and discrete devices, which began mass production of 6-inch and 8-inch wafers in 2004 and 2009, respectively. In the domestic leading level. In 2017, the company's 12-inch semiconductor wafer technology passed the national 02 special acceptance. In the field of discrete devices, the company is a domestic first-class supplier of Schottky diode chips. At the same time, relying on the advantage of discrete power devices, the company marches into compound semiconductors.
The wafer industry is booming, and the company takes the lead in domestic substitution: SUMCO data shows that since January 2021, the inventory level and turnover days of customers downstream of 12-inch wafers have continued to decline, and the supply of wafers has been tight. Wafer prices are expected to keep rising: the 8-inch wafer signed with customers by SUMCO and Shinyue is up about 10% and 15% of the 12-inch wafer. The major domestic wafer manufacturers only occupy about 30% of the domestic wafer market, mainly with sizes of 8 inches or less, and the localization rate of 12-inch wafers is low. The company is a technological leader in heavily doped silicon wafers, and plans to achieve a production capacity of 150,000 wafers / 12-inch wafers per month by the end of 2021, and will further expand production capacity in the future, which is expected to lead the domestic replacement of large-size silicon wafers.
New energy vehicles, photovoltaic driven power devices performance improvement: the company's power devices products are mainly used in automotive electronics and photovoltaic and other fields, automotive electrification led to increased demand for power semiconductors, photovoltaic installed capacity also pulled up the demand for matching power devices, the current supply of power devices is in short supply, the delivery period continues to be extended, or further price increases. The company is highly competitive in segment areas, accounting for 35% of the global share of photovoltaic dedicated SBD, benefiting from the rapid growth of downstream demand in the long run, and the profitability improvement brought about by rising prices in the short term.
Actively layout compound semiconductors to further open the room for growth: GaAs is currently mainly used in the RF field, and its future applications in 3D deep cameras, automotive lidar and other fields are also expected to gradually expand. Liang Dongxin, a subsidiary of the company, currently has a manufacturing capacity of 70,000 GaAs RF chips per year. At the same time, the company's Haining base is also under planning, with an estimated production capacity of 360,000 pieces per year.
We forecast that the company's earnings per share in 21-23 years will be 1.27,1.96,2.80 yuan respectively. Considering that the localization rate of large-size silicon wafers is still at a low level and the company has broad growth space in the future, we choose the absolute valuation method (FCFF) to give the company a target price of 160.52 yuan and a buy rating for the first time.
Risk hint
The prosperity of the silicon wafer industry is lower than expected; the downstream demand of power devices is lower than expected; the progress of localization is not as expected; the business development of compound semiconductors is not as expected; capacity investment and construction is not as expected.

A total of 11 agencies have rated the stock in the last 90 days, including 10 buy ratings and 1 overweight rating; the average institutional target price in the past 90 days is 146.27; according to the Securities Star valuation analysis tool, Lionwei (605358) has a good company rating of 3 stars, a good price rating of 0.5 stars and a comprehensive valuation rating of 2 stars. (rating range: 1-5 stars, up to 5 stars)