SMIC Subscription: Top Grid has been assigned 842 signed securities firms, and the market value is predicted to reach 650 billion yuan

The first “A+H” red-chip Sci-Tech Innovation Board company, a domestic chip leader, and the largest IPO in the history of the Sci-Tech Innovation Board… With various auras, SMIC ushered in online and offline subscriptions, with an issue price of 27.46 yuan per share .

Since the news of SMIC’s A-share sprint was exposed, its Hong Kong stock price has continued to rise, and has skyrocketed recently. From the beginning of June to July 6, SMIC’s Hong Kong stock rose from HK$16.84/share to HK$40.25/share. The overall A gain of 138%.

This also makes SMIC’s listing on the Science and Technology Innovation Board much attention.

1. SMIC’s subscription on July 7

Since it was accepted, it took 19 days to pass the meeting and 29 days to be approved for registration… SMIC continues to refresh the record of IPOs on the Science and Technology Innovation Board. According to the announcement on the evening of July 5th, SMIC’s IPO on the Science and Technology Innovation Board was priced at 27.46 yuan per share. The subscription was made on July 7, and the top-tier subscription was awarded 842 signatures.

　2. Introduction to SMIC

SMIC was established in April 2000 by the founder Zhang Rujing. It is the largest wafer foundry with the most advanced technology in China. More than 90% of the operating income in 2019 came from wafer foundry, and the rest came from services such as mask manufacturing and testing.

The so-called wafer refers to the silicon wafer used in the production of silicon semiconductor integrated circuits. Various circuit element structures can be processed on the silicon wafer to become IC products with specific electrical functions. Because of its circular shape, it is called a wafer. round. In the semiconductor industry chain, wafer foundry is equivalent to giving chips “life”.

Generally, the smaller the precision of the wafer, the higher the technological requirements for production, and the higher the corresponding difficulty coefficient.

At present, SMIC is the first wafer foundry company in China to achieve mass production of 14nm FinFET, representing the most advanced level of independent research and development of integrated circuit manufacturing technology in mainland China; Advanced 24nm NAND, 40nm high-performance image sensor and other characteristic processes.

　3. How is SMIC’s valuation?

Guosen Securities Research Report pointed out that after SMIC is listed on the Science and Technology Innovation Board, the PB of China Resources Microelectronics (semiconductor foundry), which is the benchmark for the Science and Technology Innovation Board, is 5 times. The two newly built factories in the future will contribute a net profit of US$1 billion = 3.5*12*2*4000*30%, or about 7 billion yuan. The average price-earnings ratio of A-share semiconductor companies is 93 times, and the future market value can reach 650 billion yuan.

Industrial Securities has made four potential valuation anchor guesses: valuation anchor 1, based on the premium of comparable sectors and CRSC A/H shares, the potential valuation is 191.9 billion yuan/185.6 billion yuan; valuation anchor 2, based on science and technology GEM semiconductor companies (excluding the top three companies) are estimated by PE and PB, with a potential valuation of 223.1 billion yuan / 291.3 billion yuan; valuation anchor three, based on TSMC and global comparable companies PB calculation, the potential valuation of 235.1 billion yuan / 59.7 billion yuan ; Valuation anchor IV, based on the ratio of TSMC’s market share, the potential valuation is 209.3 billion yuan.

　　4. SMIC has become the King of Fundraising on the STAR Market

SMIC is expected to raise a total of 46.287 billion yuan in this issuance (before the over-allotment option is exercised), after deducting the issuance cost of 635 million yuan (tax included), the net amount of funds raised is expected to be 45.652 billion yuan; if the over-allotment option is fully Exercising, the total amount of funds raised is expected to be 53.23 billion yuan, after deducting the issuance costs of 727 million yuan (tax included), the net amount of funds raised is expected to be 52.503 billion yuan.

It is understood that SMIC’s fundraising this time has set a record on the Science and Technology Innovation Board, and it is also the king of A-share fundraising in the past ten years. According to the historical fund-raising situation of A-share IPOs, if the over-allotment option is fully exercised, SMIC will rank among the top five in terms of fund-raising. At the same time, after the Agricultural Bank of China raised 68.5 billion yuan in 2010, A-share funds have been raised in the past ten years. Largest IPO.

　　5. SMIC’s raised funds are mainly invested in

According to reports, SMIC’s raised funds this time are mainly invested in: first, the 12-inch chip SN1 project, and second, the reserve funds for advanced and mature technology research and development projects. For the fundraising project, Zhou Zixue detailed that the carrier of the “12-inch chip SN1 project” is SMIC South. The project has a planned monthly production capacity of 35,000 pieces, and has built a monthly production capacity of 6,000 pieces. It is the first FinFET process production line in China. SMIC’s main platform for R&D and mass production of advanced processes of 14nm and below.

　　6. Institutional Analysis

Guosen Securities Research Report pointed out that the double barriers of “capital + technology” ensure the leading position and maintain the “buy” rating, saying that since the company is about to land on the Science and Technology Innovation Board, China Resources Micro-valuation (PB is 5 times) is required to be listed on the Science and Technology Innovation Board. . In addition, the company’s technical strength and scale surpass that of China Resources Micro, which is very reasonable at a valuation of 5 times PB. Due to the high overlap of investors investing in SMIC A/H, the A/H valuation of SMIC will be the same, and the valuation of Hong Kong stock SMIC will be in line with the 5 times PB valuation of the Science and Technology Innovation Board.

Maintain the valuation and target price of SMIC’s Hong Kong stock market. The company’s reasonable PB valuation range is 5~6 times, corresponding to HK$46~48. Maintain performance forecast and “buy” rating.

The company’s technology as a semiconductor foundry follows, and breakthroughs in technology nodes are the key. You should first look at the company’s technology, then revenue, and finally profit. It is estimated that the revenue from 2020 to 2022 will be US$3.639 billion/US$4.189 billion/US$4.813 billion respectively, with a growth rate of 16.8%/15.1%/14.9%. Growth rate -18.1%/13.3%/8.8%.

　　7. Many listed companies actively subscribe

Before the start of subscription on the SMIC Science and Technology Innovation Board, a number of listed companies have announced that they have participated in the subscription.

Zhichun Technology and Juchen Co., Ltd. invested 100 million yuan respectively as limited partners to subscribe for the fund share of Juyuan Xinxing, and Shanghai Xinsheng, a wholly-owned subsidiary of Shanghai Silicon Industry (688126.SH), subscribed and contributed 200 million yuan with its own funds. Participated in the investment in Juyuan Xinxing, as well as China Micro Corporation (688012.SH), Montage Technology (688008.SH), a subsidiary of Montage Investments, Weil Shares (603501.SH), Huiding Technology (603160.SH) A number of A-share listed companies announced that they would participate in the investment in Juyuan Xinxing Fund.

As a strategic investor, Juyuan Xinxing subscribed for SMIC’s initial public offering of shares on the Science and Technology Innovation Board, with a fund size of RMB 2.305 billion. It is understood that the limited partners of Juyuan Xinxing include 13 A-share listed companies and 1 company to be listed on the Science and Technology Innovation Board.

According to the strategic placement targets disclosed by SMIC, a total of 29 strategic investors participated in the placement, including large insurance companies with long-term investment willingness, large state-level investment funds, etc., with a total subscription amount of 24.621 billion yuan. Among them, China Information and Communication Technology Group Co., Ltd. subscribed for 2 billion yuan, and the National Integrated Circuit Industry Investment Fund Phase II Co., Ltd. subscribed for 3.5 billion yuan. In addition to the “national team”, international strategic investors include Singapore Government Investment Co., Ltd. (subscribed for 33 100 million yuan), Abu Dhabi Investment Authority (500 million yuan subscription).