Main points of investment:
2022 performance KuaiBao: operating income 544 million yuan, 14.71% last year, return to the mother net profit of 162 million yuan,-25.77% last year. 2022Q4's quarterly income was 153 million yuan, up about 14% from a month earlier, while its net profit was 27 million yuan, down-39% from a month earlier. Comments: 2022Q3 gross profit margin 51.01%, month-on-month increase 0.4pct, year-on-year decline 14.6pct. Between 2021 and 2022, the cost of electronic-grade polysilicon, an upstream raw material, rose by 30%, affecting the company's gross profit margin.
Expand production and consolidate the leading position of semiconductor etched silicon materials. Shengong Co., Ltd. mainly uses monocrystalline silicon materials for etching equipment upper and lower electrodes and outer rings, etc., with a market size of about $400 million to $500 million and a market size of $1 billion to $1.5 billion for silicon electrodes.
Shengong core team has more than 20 years of overseas experience, the company's magnetic field-free large diameter monocrystalline silicon manufacturing technology, solid-liquid coexistence interface control technology, thermal field size optimization technology and other technologies have been in the international advanced level. In 2021, products with large diameter silicon materials of more than 16 inches accounted for 26.32%, an increase of 176% compared with the same period last year. In January 2023, the production capacity of silicon materials reached about 500t / year, which increased by 10%. In 2023, the production capacity will be expanded to 1000 tons / year.
In the silicon parts plate, it is expected to become the leading company of silicon electrodes in China. In 2021, the company established two parts factories in the north and south of Quanzhou, with the ability of the whole industry chain from etching silicon materials to silicon electrodes. The products are used in 12-inch plasma etching machines and have been supplied in small quantities, and high-precision equipment for chemical mechanical polishing (CMP) was developed in 2022. The diameter of polycrystalline silicon structure products is generally more than 22 inches, and it began to send samples to customers in 2022. It has passed a customer evaluation and achieved stable supply during the year.
Ultra-low defect 8-inch silicon wafer capacity climbing period, 8-inch semiconductor silicon single crystal polishing wafer production and construction project was delayed.
The IPO investment project will increase the annual output of 1.8 million 8-inch semiconductor polishing wafers and 360,000 semiconductor companion wafers. A production line of 50,000 wafers per month has been built, and 100,000 wafers / month ordered in the second phase are coming in one after another; 8-inch test wafers are officially supplied to Japanese customers, and 8-inch wafers with low defects and high resistivity wafers are progressing smoothly in client evaluation.
The proportion of domestic customers has increased. As the global manufacturers of etching machines and etching silicon electrodes are located in Japan, Korea and the United States, the main customers of Shengong include Mitsubishi Materials, SK Chemistry, CoorsTek, Hana and other international enterprises. Since 2019, the share of domestic revenue has risen from 1.9% to 14.43% in 2021.
Downgrade earnings forecast and maintain "buy" rating. In 2022, the revenue exceeded Shenwan's forecast by 510 million, and the net profit of 160 million was slightly lower than Shenwan's expected value of 180 million. Due to the fact that the company's material sector lags behind the semiconductor cycle by about half a year, and it is expected that the high cost of polysilicon materials will continue to affect the 2023 gross profit margin, the forecast of 2023-24 net profit from home ownership will be reduced from 240,000,000 yuan to 2.0cm, maintaining a "buy" rating of 2023 PE 34X.
Risk tips: semiconductor business cycle downward, new product expansion is not as expected, yield climbing is not as expected.