Brief performance review

On March 30, 2023, the company disclosed its annual report. It achieved revenue of 2.65 billion yuan in 2022, an increase of 65.6% over the previous year; it achieved net profit of 750 million yuan for the mother, an increase of 123.1% over the previous year. Among them, 2022 Q4 achieved revenue of 595 million yuan, an increase of 27.4% over the previous year and a decrease of 16.6% from the previous month; Guimu achieved net profit of 125 million yuan, an increase of 40.9% over the previous year and a decrease of 42.6% from the previous month.

Management analysis

The high boom in silicon-based materials boosted the company's performance, and new projects were steadily implemented. Against the backdrop of rapid growth in demand in the downstream new energy sector in 2022, the prosperity of trichlorosilicon products increased, and the company's annual sales price increased by more than 80% compared to 2021. At the same time, high-purity silicon tetrachloride products maintained a strong production and sales trend throughout the year. Annual sales increased 42% year on year to 24,000 tons, and prices rose 51% year on year. The silicon-based materials sector achieved a sharp rise in volume and price throughout last year. At the same time, with the continuous increase in the capacity utilization rate of high-purity silicon tetrachloride, it has now gradually grown into the company's main product with high added value and high-end applications.

New projects have been steadily implemented, and the range of electronic grade products will be further enriched in the future. In November 2022, the company's “50,000 tons/year trichlorosilicon project” was successfully put into trial production; the 72,200 tons/year trichlorosilicon project will be completed in April 2023, forming an integrated production system with the existing 50,000 ton project; the silane coupling agent phase II “73,000 tons/year silane coupling agent series product project” will enter trial production in 2022, and will soon enter official production in the first half of 2023. The company's performance is expected to improve steadily as production capacity for many of the company's projects under construction is released one after another. Furthermore, on February 28, 2023, the company announced that it plans to invest 235 million yuan to build a filling capacity expansion project for the electronic grade silicon tetrachloride and the original electronic grade silicon dichloride project with an annual output of 500 tons. As the company continues to enrich the variety of electronic grade products, it is expected that it will seize the opportunity to further occupy the high-end market in the future.

Profit Forecasts, Valuations, and Ratings

The company has put into operation many new projects this year. While the industrial layout continues to be rich, the product structure is also gradually transforming to the high-end. At the same time, the advantages of the integrated layout of the industrial chain will be further strengthened. Considering that the price of the core product trichlorosilicon has declined somewhat since this year, we lowered the company's 2023-2024 net profit forecast to 840 million yuan (-18.7%) and 1.05 billion yuan (-17.7%). The estimated net profit of Fumo in 2025 is 1.14 billion yuan. The current market value corresponding to PE valuation is 10.74/8.58/7.94 times, respectively, maintaining the “increase in holdings” rating.

Risk warning

The commissioning of new projects fell short of expectations, product prices fell, raw material prices rose, polysilicon production capacity fell short of expectations, demand for construction delivery, etc., declined, and directors' and supervisors reduced their holdings