Overview of events:
On August 29, the company released its semi-annual report of 2022, showing that in the first half of 2022, the company achieved operating income of 263 million yuan, an increase of 28.87% over the same period last year, and a net profit of 91 million yuan, down 9.33% from the same period last year. Of this total, the revenue in the second quarter was 121 million yuan, an increase of 1.17% over the same period last year, and the net profit of returning home was 41 million yuan, down 32.71% from the same period last year.
Analysis and judgment:
With a foothold of small size and large size, monocrystalline silicon is expected to continue to increase its share and optimize its structure.
21-22H1, affected by the continuous increase in the price of polysilicon materials upstream, the company's profitability of large-diameter monocrystalline silicon materials for etching has decreased to a certain extent, and the company's comprehensive gross profit margin has dropped from 65.29% of 21H1 to 55.41% of 22H1, a year-on-year decrease of 9.88 percentage points, which is also the main reason for the decline in Q2 profit growth. We believe that although the price of upstream materials has risen more than expected, the company still reduces costs and increases efficiency by means of process improvement and structural optimization. Under the trend of increasing requirements for the size of silicon electrodes in the etching process, the company, as an upstream material supplier, has successfully achieved a breakthrough in large-diameter products and market penetration after entering the international market from a small size. the dependence of downstream customers is rapidly increasing, the company is expected to continue to benefit share improvement and structural optimization, further consolidate its profitability, through the industry cycle.
Domestic wafer factories have entered a period of accelerated expansion, and equipment manufacturers and wafer factories are expected to increase the procurement of domestic silicon electrodes. Judging from the production expansion plans recently disclosed by major domestic wafer manufacturers, the expansion of domestic production lines in the second half of the year is expected to further increase the shipments of domestic semiconductor equipment, which will lead to the purchase of silicon electrode products by etching equipment factories. at the same time, production line expansion will also shorten the certification cycle of domestic silicon electrodes and broaden the company's customer range. We believe that silicon electrode products, as the company's second growth curve, have a broad domestic market space and high certainty of import substitution, and are expected to enter the high-speed development stage of 1murn. At the same time, benefiting from equity financing, the company accelerates the expansion of production capacity in Quanzhou and Jinzhou, and is expected to achieve rapid growth in revenue and profits in the future.
The 8-inch lightly doped large silicon wafer has expanded smoothly, and a subsidiary has been set up to enter the field of silicon carbide. According to the semi-annual report, a certain type of silicon wafer has been shipped to a Japanese customer for a long time, and the 8-inch test wafer has passed the evaluation and certification. at present, the company is a qualified supplier of this material in several domestic wafer factories. In addition, the company has developed high-end argon annealed wafers, which has made some progress and has the potential to supply high-quality silicon wafers to domestic wafer factories. This year, the company also established a Jingchen Semiconductor subsidiary, mainly engaged in the R & D and manufacture of silicon carbide components. We believe that with the continuous acceleration of the certification of large silicon wafers, the gradual release of production capacity according to the pace, and the promotion of the research and development of new products of superimposed silicon carbide, there will be broad room for growth and greater flexibility in performance in the future.
Investment suggestion
Maintain a "buy" rating. Affected by the increase in the price of raw materials, we have adjusted our profit forecast. It is estimated that the net profit of the company from 2022 to 2024 is 2.52,3.37 and 453 million yuan respectively, and the corresponding EPS is 1.57,2.11,2.83 yuan respectively. The current stock prices correspond to PE values of 32.01,23.86 and 17.78 times from 2022 to 2024, respectively.
Risk hint
The company's performance, semiconductor industry, product export, fund-raising projects are lower than expected.