Incident: On April 27, the company released a first-hand report. The revenue achieved during the reporting period, net profit returned to the mother, and net profit after deducting non-net profit were 12.2, 8.2, and 810 million, respectively, YoY +370.5%, 839.6%, and 792.7%, respectively. The performance exceeded expectations, mainly benefiting from the continued rise in the price of high-purity quartz sand and the demand in the semiconductor industry. High purity quartz ore sources are guaranteed to support high sales growth, and prices have entered a “flexible range”. 1) Sales volume: It is estimated that overseas sales exceeded 10,000 tons during the reporting period, which is basically the same as the previous month. According to the report, the 60,000-ton high-purity quartz sand project planned by the company is expected to be put into operation on 23H2, and the 150,000-ton semiconductor-grade high-purity quartz sand project is expected to be gradually implemented in the future, and sales are expected to continue to rise. Furthermore, the company is the second leader in high-purity quartz, and has obvious advantages in supplier cooperation and mineral source information storage. Furthermore, it is not ruled out that the company's industrial chain will be extended upstream to strengthen competitiveness. We judge that the company's supply of mineral resources is guaranteed to support a high increase in sales. 2) Price: It is estimated that the average price increased significantly month-on-month during the reporting period. Currently, the supply of high-purity quartz sand is tight, and it has become a stumbling block in the production of photovoltaic silicon wafers, which is expected to gather more profits in the industrial chain. According to the official account of the 2023 Quartz Conference, the price of high-purity quartz sand in 23Q1 is almost monthly. The frequency has clearly accelerated and the magnitude has increased markedly. We think the price is still rising, and flexibility can be expected. Furthermore, we believe that the high-purity quartz sand industry has high barriers in terms of mineral resources and purification, that supply-side constraints are strong, and the boom cycle is expected to lengthen. 3) Unit profit: It is estimated that the net profit of a ton of quartz sand exceeded 70,000 during the reporting period, up significantly from Q4. 4) Product structure: The company is actively promoting product structure optimization. Considering that the competitive pattern of quartz thickening and the company's technology continues to break through, it is expected that the proportion of inner layer sand in the company will continue to increase, while the unit price of middle and inner layer sand is higher, which is expected to further increase the company's overall average price.
Semiconductor quartz materials have maintained a high increase, and the optoelectronics business is operating steadily. 1) Semiconductor quartz materials: We expect the company's semiconductor materials to continue to grow rapidly during the reporting period. The company has now passed the certification in the field of TEL diffusion and etching, as well as the certification of the LAM etching process, and the US material certification has progressed in stages. The company is speeding up the construction of 6,000 tons/year electronics-grade projects, which is expected to drive the semiconductor business to continue to soar. In addition, the company is actively promoting the optimization of semiconductor quartz material product structures. Under the continuous improvement of technology and scale effects, the profitability of major semiconductor quartz material products is expected to continue to increase. 2) Optoelectronics business: In the field of light sources, steady growth is expected. In the field of optical fibers, the company has made breakthroughs in high-temperature sintering furnace core tubes and synthetic quartz liners, and its products are widely recognized by customers. In the field of optics, the company has quartz coating materials, ultraviolet synthetic quartz materials, and infrared quartz materials. Relying on advanced production technology and quality control capabilities and testing methods, the share has been further expanded.
Investment advice: We raised the company's net profit for 23-25 to 42.0/71.4/9.88 billion (the original profit forecast for 23-25 was 29.6/4996/6.83 billion), mainly considering that the price of high-purity quartz sand is expected to continue to rise, and the assumption that the average price of high-purity quartz sand is raised. The adjusted profit forecast corresponds to the current stock price PE 10.1/5.9/4.3 times. Considering the boom in the high-purity quartz sand business, the company's sales volume continues to rise, and semiconductor quartz materials are expected to continue to be sold, maintaining the “increase in holdings” rating.
Risk warning: demand falls short of expectations; new production capacity in the industry exceeds expectations; company capacity investment falls short of expectations; risk of technological change: raw material prices rise sharply