re: 1193.HK (HK listed) - China Resources Logic - HK$0.77
PRC SEMICONDUCTOR MAKER
Home: crlogic.com.hk
Quote: finance.yahoo.com
Chart: bigcharts.marketwatch.com
Tel: (852) 2299-9188
Fax: (852) 2299-9300
email investor-relations@crc.com.hk
Well, my rather extensive DD on the PRC semiconductor segment and it's contenders is finally producing tangible results. HongKong listed China Resources Logic (1193.HK) is one of the world's semiconductor makers (foundry AND design house) with the lowest version I ever seen for a profitable contender in this sector.
CHINA RESOURCES LOGIC (1193.HK) crlogic.com.hk
Quote: 0.75 HK$ (SEHK) Shares Out : 2618m Sh# Float : 680m Sh# (26%)
Revenue (6mt – 2003/06) : 1108m HK$ (+49% y/y) Gross Margin : 25% (37% target)
PSR (Price/Sales Ratio) : 0.9 PE Ratio (6mt annualized) : 11.2
Debt / Equity : 0.3 Current Ratio : 1.3 Market Cap: 1963m HK$
Valuation : Extraordinary cheap compared with US standards. Price/Sales < 1, PE 11, Growing faster than it’s markets served (CAGR wise), new capacity expansion projects look exciting. Future Gross margin should be up due to improved efficiency caused by streamlining recent fab acquisitions.
Semiconductor Operational Model : Foundry (3d party) and IC-design house – Company became one of the largest players in the PRC semiconductor industry thru it’s acquisitions in from 2001 to 2003
Semiconductor segments : CMOS, analog, mixed signal ICs (less margin pressure than memory, higher entry barriers), Fab operations : mostly 6” and 4” fabs – CRL recently purchased the entire previous fab equipment of Chartered Semi (Singapore) which was relocated to CRL’s foundries.
Prime Investment Motivation : Huge Opportunity for Import substitution (Semi). Then, the PRC is currently world’s lowest cost location for foundry services and IC design. This should provide a competitive advantage to CRL since foreign competitors won’t be able to duplicate CRL’s cost advantage in the lower end market where it participates. PRC semi market expected to grow at CAGR of 30% for foreseeable future (Dataquest). Upcoming fab projects may include cutting edge 8” plants.
Semi revenue contribution now at 42% of total sales (future goal >60%) – New foundry to be built thru CSMC Tech subsidiary (New 6” fab to commence production in 2004) with direct equity participation of leading venture and privateequity investors (3i, PVC, IFC, Templeton etc..) – mature technology (not leading edge), rather low capex
Compressor Segment : Leading compressor maker (Rank 4), Cash cow (tie ins to many high quality Japanese air –conditioner makers), CRL won’t compete with end-customers, provides additional investment resources for semi expansion, particularly good relations to Sanyo Electric of Japan (JV partner)
Company Profile - 1193.HK – CHINA RESOURCES LOGICThe Group is principally engaged in technology related manufacturing businesses with two distinctive business segments, namely air-conditioner compressor and semi-conductor. The Group's shares became listed with its original office furniture business on the Stock Exchange of Hong Kong Limited on 7 November 1994. After its business restructuring in early 2001, the Group has shifted its business focus to businesses acquired from China Resources (Holdings) Company Limited, namely air-conditioner compressor production and manufacturing of technology-oriented semiconductor products.
China Res Logic 1193
Chairman SONG Lin
Issued Capital 2,618M Shares
Par Value (HKD) 0.100
Market Capitalisation (HKD) 1,990M
Corporate Profile In early 2001, the Group successfully completed its restructuring, and thereafter, it becomes the listed flagship of China Resources (Holdings) Co. Ltd.. Following a series of restructuring exercises, the Group was transformed from an office furniture manufacturer and distributor to become a technology oriented manufacturer focusing on technology based consumer products such as Integrated Circuits ("ICs") used in consumer electronics and compressors used in residential air-conditioners. The Group's residential air-conditioner Compressor Business is currently one of the top-four residential air-conditioner compressor manufacturers in the PRC. During the FYE 12/2002, the Group's Semiconductor Business also acquired a major IC manufacturer and a leading IC design house in the PRC and catapulted the Group to become one of the largest local players in the PRC's semiconductor industry. As a result of this acquisition strategy, the Group's source of revenue is now more diversified and reduce the reliance on its Compressor Business. As disclosed, the turnover contribution proportion to the Group from the Semiconductor Business has increased from 15% in 2001 to 28% in 2002 and the net profit (before corporate expenses) has also significantly increased from 16% to 35%. With a view to put more focus on the Compressor and Semiconductor Businesses, the Group also disposed of its IT Business to China Resources (Holdings) Company Ltd in Jan 2003.
Core Assets/Investments (12/2002): China Resources (Shenyang) Sanyo Compressor (63.75%); Shenyang Shengrun Sanyo Compressor (63.75%); Wuxi China Resources Semico Microelectronics (100%); Wuxi Huajing Microelectronics Corp.(89.277%); Huake Microelectronics (Shenzhen) (100%); Semicon Microelectronics (Shen Zhen) (100%); Logic Industrial Enterprises Zhuhai (100%); and Zhuhai Logic Far East Industrial (100%). |
