Brief comment on performance

On August 21, the company disclosed the mid-year report of 2023, with revenue of 1.455 billion yuan in the first half of the year, + 150% year-on-year, and net profit of 408 million yuan, + 343%, of which Q2 realized revenue of 818 million yuan, + 162% year-on-year and + 29% compared with the same period last year. The net profit reached 236 million yuan, + 389% and + 37% respectively, and the performance was in the median of the forecast, which was in line with expectations.

Business analysis

The new production capacity has been put into production one after another, and the shipment of crucibles is expected to increase slightly. The company's fund-raising project is carried out as planned, and the production and sales of Q2 crucibles are expected to slightly increase to 37000; with the trial production line gradually reaching production, the company is expected to ship 18,000 crucibles in 2023. The company's convertible bond Ningxia Phase I / Phase II project plans 8 / 10 production lines respectively, and it is estimated that the production capacity of crucibles will be increased by 180,000 / year. After all the crucibles are put into production, the production capacity of crucibles will be increased to 340,000 / year, further opening the shipping space of crucibles.

The price of the crucible smoothly transmits the upstream cost, and the profitability continues to improve. The high photovoltaic demand downstream has led to a rapid increase in the demand for quartz crucibles, which is restricted by the supply of high-quality imported sand and crucible technology in the upstream, the supply of quartz crucibles is tight, and the company has a stable supply of high-purity inner sand and significant advantages in high-quality crucibles. Crucible price smoothly conduction upstream high-purity quartz sand price rise, crucible profitability improved. In the first half of the year, the gross profit margin of the company's crucible business was 46.1%, which was 37.31% higher than that of 2022 and 3 PCT higher than that of 1Q23. It was estimated that the net profit of the company's crucibles increased to 5000-6000 yuan per unit.

The supply and demand of high-quality crucibles continues to be tight, and the production capacity release + raw material locking + product advantage guarantee is up. The bottom of silicon price promotes the release of downstream demand, and the end production of components continues to rise from July to August, followed by N-type promotion + shortage of inner sand or increase crucible consumption, under the background of tight supply and demand, downstream silicon wafer enterprises have a strong ability to bear the price of crucibles in order to ensure the harvest rate and crystal drawing quality; quartz crucibles have successfully conducted a rise in raw material costs since 4Q22, and the subsequent prices are expected to increase quarter by quarter. With the rapid expansion of crucible production capacity and locking in imported sand to ensure quality, the company is expected to increase the cost of raw materials and meet the demand by virtue of its product advantages.

Earnings forecast, valuation and rating

The company's production capacity release + core raw material lock + product advantage guarantee is rising, fine-tuning 2023-2025 net profit to 9.9,12.6, 1.63 billion yuan, the current stock price corresponding to PE is 10-8-6 times, maintaining the "buy" rating.

Risk hint

The supply and price of raw materials fluctuated, and the industry demand was lower than expected.