The company's operating income increased by 36.2% in 2021, mainly due to the continuous increase in capacity utilization and shipments of the company's products, in which the production and sales of large silicon wafers nearly doubled, and the first 300,000 wafer / month 300mm wafer production line was completed. With the relay of the second 300,000 wafer / month 300mm wafer production line and the construction of 400,000 wafer / year 300mm high-end silicon-based projects, the company's large wafer business is expected to reach a break-even point this year under the advantage of superimposed scale, and the company's performance is expected to grow rapidly. Consider the company as a platform company of semiconductor silicon materials, giving the company 25 times PS in 2022, corresponding to the target price of 32 yuan, maintaining a "buy" rating.

In 2021, the company's revenue grew by 36.2%, and the production and sales of large silicon wafers nearly doubled. In 2021, the company realized revenue of 2.467 billion yuan, year-on-year + 36.2%; net profit of 146 million yuan, + 67.8% of the same period last year; and deduction of non-return net profit of-130 million yuan, reducing losses by 53.1% over the same period last year. From a product point of view, the production / sales of 200mm and below silicon wafers are 496.45,497.2 million wafers, year-on-year + 30.3% picks 33.6%, corresponding to realized revenue of 1.421 billion yuan, year-on-year + 15.8% × 300mm wafers production / sales of 188.4% picks 175.2 million wafers, year-on-year + 82.3% picks 93.6%, corresponding to realized revenue of 688 million yuan, + 117.9%. 2021Q4 achieved revenue of 700 million yuan, + 38.7% year-on-year, in line with expectations; realized non-return net profit of-29 million yuan, reducing losses by 60.6% over the same period last year.

The scale effect appears gradually, and the range of loss narrows significantly. With the economies of scale brought about by the capacity release of 300mm wafers, its gross profit margin reached-6.17% in 2021, an increase of 28.65 pcts over the same period last year. We estimate that the gross profit margin of the company's 2021Q4 silicon wafer is the first time in history that its single-quarter gross profit has become a positive one. In terms of fees, except for the slight increase in management fees due to equity incentive fees, all other rates have been reduced, with a total of 18.93% of the four fees, a decrease of 4.84 pcts over the same period last year. Although the combined net income of other income plus fair value changes as a share of revenue decreased from 20.74% in 2020 to 11.89% in 2021, the company's net interest rate rose 0.93 pct to 5.90% in 2021. As economies of scale emerge, we expect large silicon wafers to reach a break-even point by the end of this year.

The R & D capability has been continuously improved and the product certification has been carried out smoothly. In terms of research and development, in 2021, the company accelerated the research and development of 300mm high-end silicon-based materials corresponding to substrate silicon wafers, and basically completed the development of corresponding 300mm polished wafer substrate products. The Ministry of Science and Technology "02 special project"20-14nm integrated circuit 300mm wafer technology development and industrialization" project passed the acceptance in June 2021, and the major project "300mm defect-free wafer R & D and industrialization" project of the Ministry of Science and Technology has made a major technological breakthrough. In terms of certification, the company successfully passed the technical certification of 300mm wafers for 14nm logic products and 300mm polished wafers for 64-layer and 128-layer 3D NAND applications, and achieved batch supply, successfully developed and verified 300mm wafers for 19nmDRAM, and made a breakthrough. The company's "three coverage" (full coverage of all kinds of processes, full coverage of domestic manufacturers, full coverage of a variety of chips) has been further improved and consolidated.

Fund-raising projects to expand capacity, strategic investment layout of the industrial chain. In 2021, the construction of the company's 300mm wafer production line of 300,000 wafers per month was completed. One of the additional investment projects, "300mm high-end silicon wafer research and development and advanced manufacturing project", will further increase the 300mm wafer production capacity of 300,000 wafers per month and enrich the product portfolio. The second fund-raising project, "300mm high-end silicon-based material research and development pilot project", will build a 300mm high-end silicon-based material R & D pilot line with an annual capacity of 400,000 wafers / year. In addition, the company has also launched a production expansion plan for 200mm epitaxial wafers for automotive electronics applications to consolidate the supply advantage of high-end segments. The company carries out horizontal and vertical strategic layout in the semiconductor materials industry, cutting into the optical mask (400 million yuan) and semiconductor crystal pulling furnace (20 million) by setting up partnerships and direct equity investment. promote the security and self-control of the domestic supply chain.

Risk factors: intensified market competition; product price fluctuations; the company's product certification progress is not as expected; the company's capacity construction is not as expected.

Investment advice: the company's 300mm wafer production capacity is the largest in China and is expected to usher in a break-even point. With the smooth progress of product certification and expansion projects, performance is expected to grow at a high speed. Considering the pace of capacity release of the company's silicon wafer project, we adjust the company's 2022-2023 operating revenue forecast to 3.519 billion yuan (the original revenue forecast for 2022-2023 is 3.304 billion yuan), and the new revenue forecast is 5.43 billion yuan in 2024. Under the scale effect, it is expected that the company's large silicon wafer project will turn into profit by the end of this year, so the company's net profit forecast for 2022-2023 is 244,316 million yuan (the original forecast for 2022-2023 is 154,000,000 yuan), and the new 2024 forecast is 472 million yuan, corresponding to the 2022-24 EPS forecast of 0.090.12mm0.17 yuan. The average PS of the company since going public is 40.9, the average minus standard deviation is 27.8, and as of April 13, 2022, the company's PS (TTM) is 24.6. Considering that the company's large silicon wafer business has initially achieved the first 300000 wafer production, corresponding to the basic realization of "0 to 1" process, the overall PS valuation range has declined, giving the company 25 times PS in 2022, corresponding to the target price of 32 yuan, maintaining a "buy" rating.