3Q21's revenue and profit hit a new high, and gross profit margin declined from the previous month.
In the first three quarters, the company achieved a revenue of 313 million yuan (YOY 61.01%), a net profit of 114 million yuan (YOY 83.62%, with a forecast value of 77.86%, 94.03%, slightly lower than the median), and a net profit of 108 million yuan (YOY 86.18%). Corresponding to 3Q21's single-quarter revenue of 129 million yuan (YoY 87.62% QoQ 28.90%) and return to its mother net profit of 41 million yuan (YoY 72.39% QoQ 7.76%), revenue and profit in the third quarter continued to reach an all-time high. In terms of profitability, 3Q21's single-quarter gross profit margin was 50.69%, an increase of 2.56pct over the same period last year, but a decrease of 4.08pct compared with the same period last year; the net profit rate was 33.75%, a decrease of 0.64pct and a month-on-month decline of 4.05pct.
During the period, the rate increased and the investment in fixed assets increased.
In terms of period expenses, 3Q21's R & D fee is 3.38%, which is lower than the same period last year (0.18pct) and 0.43pct higher than the same period last year; the management fee is 7.19%, which is 1.94pct and 1.00pct higher than the previous year; and the sales rate is 0.34%, down 1.31pct and 0.43pct compared with the same period last year.
In terms of cash flow, 3Q21 has a net cash inflow of 23.88 million yuan from operating activities and a net outflow of 72.15 million yuan from investment activities, mainly for the purchase of fixed assets and a net inflow of 131 million yuan from fund-raising activities.
Greatly expand production to meet downstream needs, epitaxial mergers and acquisitions strengthen the plants and equipment acquired by the advantage companies of the whole industry chain in the first half of the year and gradually put into silicon rod production. Silicon wafer fund-raising projects (6 million grinding wafer + 4 million polished wafer + 600,000-inch polished wafer) are also advancing in an orderly manner, and a 6-8-inch polished wafer growth point will be formed in the future. The company completed the acquisition of Nantong Gaoxin and injected Jiangsu Gaoxin into the new joint venture company "Jiangsu Gaoxin". According to the announcement of September 1, 2021, the company plans to sign an investment agreement with the management committee of Rugao Industrial Park. Jiangsu Gaoxin as the main implementation of the "device chip silicon diffusion sheet, special high voltage and automotive high power diode production project" construction, the total investment of the project is not less than 1 billion yuan. The company's business further extends downstream to create the advantage of the whole industry chain.
Investment advice: upgrade to "buy" rating
Taking into account the progress of the company's production expansion and the merger of the subject matter of the acquisition, we raised the company's 21-23 net profit for 21-23 to $1.564 million (the previous value was $1.52 billion), and the PE corresponding to the share price on October 28, 21 was 43.7x26.8x18.7x, which was upgraded to the "buy" rating.
Risk hint: downstream demand is not as expected, production expansion progress is not as expected, and the risk of intensified competition.