Key points of investment

Next Tuesday (6/13), “Shichuang Energy”, a company listed on the Science and Technology Innovation Board, will ask for a quote.

Shichuang Energy (688429): The company is mainly engaged in R&D, production and sales of photovoltaic wet process auxiliary products, photovoltaic equipment and photovoltaic cells. The company achieved operating income of 438 million yuan/712 million yuan/2,395 million yuan respectively in 2020 and 2022, YOY was 26.85%/62.58%/236.25% in that order, and the three-year compound annual revenue growth rate was 90.70%; achieving net profit of 142 million yuan/91 million yuan/293 million yuan, YOY was 33.44%/35.86%/222.77% in that order, and the three-year compound annual growth rate of Fumo's net profit was 40.31%. In the latest reporting period, 2023Q1 achieved operating income of 475 million yuan, an increase of 18.06% over the previous year; it achieved net profit of 64 million yuan to its mother, an increase of 286.97% over the previous year. According to preliminary forecasts, the company expects to achieve net profit of 145 million yuan to 164 million yuan from January to June 2023, an increase of 70.15% to 92.44% over the previous year.

Investment highlights: 1. The company was one of the earliest enterprises in China to enter the photovoltaic wet process auxiliary products market, and has now become a leading enterprise in this field. The company has been deeply involved in the photovoltaic wet process auxiliary products market for more than ten years. It has successively launched related solutions to the difficulties of “reducing costs and increasing efficiency” of photovoltaic cells, and has developed a number of industry-pioneering products. With technological leadership, the company has achieved full coverage of the top five photovoltaic cell module and battery companies shipped globally in 2021. Judging from the proportion of procurement amounts, core customers purchased wet process auxiliary products from the company reaching more than 50%, with Longji Green Energy and Tianhe Solar accounting for more than 85% of purchases. In terms of industry competition pattern, the company's current main competitors are all unlisted companies. The competitive pattern in the superimposed wet process auxiliary products market is relatively good due to high technical barriers. 2. The company is actively exploring the manufacturing process of using edge leather to produce photovoltaic half-chip batteries to provide a new driving force for revenue growth. In response to the difficulties in the efficient and economical utilization of leather after cutting a silicon rod, the company began exploring the use of edge leather as a raw material to produce photovoltaic half-chip batteries; the photoelectric conversion efficiency of photovoltaic half-chip cells produced using edge leather can reach 23.35%. After successful development, the company built a new 2GW battery production line in September 2021 to achieve mass production of the photovoltaic half-chip battery process, and was successively recognized by component companies such as Wuxi Sunde Solar Power Co., Ltd., Jiangsu Sumeda Energy Holdings Co., Ltd., and GCL Integrated Technology Co., Ltd.; in September 2022, the production line reached full production, driving the company's photovoltaic business to achieve sales revenue of 1,748 billion yuan in 2022. At the same time, the company's 2GW battery production line is equipped with the ability to upgrade to the TopCon technology route, or effectively cope with the renewal and iteration of the photovoltaic industry.

Comparison of listed companies in the same industry: According to the similarity of their main business, Anji Technology and Shanghai Xinyang were selected in the field of photovoltaic wet process auxiliary products, Jiejia Weichuang, Maitai, and Jinchen shares were selected in the field of photovoltaic equipment, and Tongwei shares and Aixu Co., Ltd. were selected as comparable listed companies of Shichuang Energy in the field of photovoltaic cells; however, due to large differences in the main business structure, the comparability of the company to the above companies may be relatively limited. Looking at the comparable companies mentioned above, the average revenue scale of comparable companies in 2022 was 27.411 billion yuan, and gross sales margin was 33.07%; in comparison, the company's revenue scale and gross margin fell short of the average of comparable companies in the same industry.

Risk warning: There is still a possibility that companies that have begun the inquiry process will not be able to go public due to special reasons; company content is mainly based on the content of prospectus and other public information; there is a risk that the selection of listed companies in the same industry is not accurate enough; there may be interpretation deviations in the selection of content data. The specific risks of listed companies are shown in the text.