The company released its 2023 mid-year report. 1H23 achieved total operating income of 1.46 billion yuan, an increase of 150.2% over the previous year, and achieved net profit of 4.1 billion yuan, an increase of 342.9% over the previous year. Among them, 2Q23 achieved total operating income of 82 million yuan, an increase of 161.6% over the previous year, and realized net profit of 240 million yuan, an increase of 389.0% over the previous year.
The quartz crucible business has performed well. By business, (1) Quartz Crucible: 1H23 achieved revenue of 940 million yuan, an increase of 242.2% over the previous year, and its share of revenue increased 17.3 pct to 64.3%. The reason for this high increase in business is that with the rapid development of the photovoltaic industry, demand for monocrystalline silicon materials has increased rapidly, the company's downstream customer output has expanded, and with the advantages of quartz crucible products, the company's order volume has increased dramatically. (2) PV supporting processing services: 1H23 achieved revenue of 460 million yuan, an increase of 74.6% over the previous year.
The quartz crucible business has greatly increased its profit level. 1H23's overall gross margin reached 36%, an increase of 9.6 pct over the previous year. The main reason is that the profit level of quartz crucible, which has a relatively high gross margin, has further increased and its revenue share has increased. By business, (1) quartz crucibles: gross margin increased by 8.3 pct to 45.4% year on year; (2) PV supporting processing services: gross margin increased by 2.0 pct to 20.5% year on year. On the cost side, the sales/management/R&D/finance expense ratio changed year-on-year - 0.12/-0.98/-0.91/0.19pct to 0.04%/1.28%/2.04%/0.25%; the reason for the decrease in the cost ratio was higher revenue growth. Net interest rate increased by 12.2 pct to 28.0% year on year.
Profit forecasts and investment recommendations. High prosperity is superimposed on the competitive advantages of the company's own products, and performance is expected to continue to increase; fund-raising projects open up space for the company to grow for a new round. We forecast that the company's EPS for 2023-2025 will be 10.3/10.9/12.4 yuan (the previous forecast was 7.7/10.9/9.3 yuan for 2023-2025). Considering that the relationship between supply and demand in the industry in 24-25 changed from tight balance to relatively moderate, we gave the company a PE valuation of 7 times in 2023, corresponding to a target price of 72.1 yuan (previously the target price before the 10:4 conversion was 117.1 yuan, based on 14.6xPer 2023), maintaining the “superior to market” rating.
Risk warning. Industry demand fell short of expectations, and raw material prices fluctuated.