Events:
The company released its third-quarter 2017 report on October 25, 2017. In the third quarter of 2017, the company achieved an operating income of 74 million yuan, an increase of 59.14% over the same period last year, and a net profit of 21 million yuan, an increase of 71% over the same period last year. In the first three quarters of 2017, the company achieved an operating income of 164 million yuan, an increase of 46.22% over the same period last year, and a net profit of 41 million yuan, an increase of 55.26% over the same period last year. The performance is in line with Shenwan Hongyuan's expectations.
Main points of investment:
The market competition of single crystal and polycrystalline silicon wafer manufacturers is fierce, and they are optimistic that the application of diamond wire in the polycrystalline field will be accelerated. In the first three quarters of 2017, the company's performance increased by 55.26% compared with the same period last year. The company's operating income and home net profit increased significantly in the third quarter compared with the same period last year, mainly due to the sharp increase in demand for electroplated diamond lines in the photovoltaic field, which is also actively applied by polysilicon wafer manufacturers in addition to the early single crystal wafer manufacturers.
The technology of diamond line plus black silicon tends to mature, and diamond line quickly penetrates into the field of polysilicon chips. In the single crystal wafer slicing market, WEDM technology has occupied the absolute mainstream. However, there were few applications in the field of polysilicon wafers last year. However, with the solution of the difficulties in battery making and high reflectivity in WEDM polysilicon wafers, diamond wire is rapidly applied in polysilicon wafer cutting. With the dual drive of technological progress and falling costs, WEDM technology will also achieve rapid replacement in the field of polysilicon wafers, and the situation that domestic diamond lines are in short supply is expected to continue. the company is one of the partners of Poly Xiexin, the largest polysilicon wafer manufacturer in China, and its development is expected to accelerate in the future.
The fund-raising project is progressing smoothly and the production capacity of diamond line is gradually released. On April 21, 2017, the company raised funds through IPO and invested 125 million yuan to build a project with an annual production capacity of 1 million km diamond line. According to the company announcement, the project production capacity is gradually released and the sales volume of diamond line products is growing steadily. After the completion of the project, the total production capacity of the company's Kumgang line is expected to reach 1.45 million km / year. On this basis, the company still intends to further expand production, the current subsidiary Jiangsu Sanchao is carrying out the construction of the second phase of the plant, but also actively adopt the way of leasing the plant to solve the problem of site restrictions and expand production capacity.
Maintain the profit forecast and maintain the "buy" rating: we believe that the company is one of the leading suppliers of electroplated diamond wire materials in China, and has recently benefited from the rapid promotion of diamond wire in polysilicon cutting. We estimate that the return net profit of the company from 2017 to 2019 is 0.74,1.61 and 242 million yuan respectively, and the corresponding EPS is 1.43,3.09,4.66 yuan per share, respectively, and the current stock price valuation is 53,24,16 times respectively. Maintain a "buy" rating.